A commercial lease dispute can put a Sydney business under pressure quickly. A landlord may demand unpaid outgoings, challenge a tenant’s repair request, propose a rent increase or issue a notice alleging a breach of the lease. For a café owner or small retailer, the cost of getting the response wrong can extend beyond legal fees to lost trading time and uncertainty about the premises.
The first step is not automatically to file a tribunal application. It is to identify the type of lease, check the relevant clause, preserve the evidence and choose the correct resolution process.
The NSW Small Business Commissioner provides mediation for retail and other commercial leasing disputes. For retail lease claims within its jurisdiction, an attempt at mediation is generally required before a party applies to the NSW Civil and Administrative Tribunal (NCAT), subject to statutory exceptions. The right pathway depends on the dispute and the remedy being sought.
This guide explains the process using official NSW Government and tribunal information available for the 2026 publication year.
What are the NSW commercial lease dispute rules in 2026?
There is no single rule that resolves every commercial tenancy disagreement. The outcome can depend on the lease, the type of premises, the parties’ conduct, the relevant legislation and the order or remedy being sought.
The Retail Leases Act 1994 (NSW) is a key source for qualifying retail leases. Other commercial arrangements, including some office and industrial leases, may be governed primarily by their contractual terms and other applicable laws rather than the full retail leasing regime.
A shop, café or restaurant operator should not assume that every provision applying to a retail lease also applies to an office, warehouse or industrial unit.
Start with these questions:
- What type of premises are being leased, and does the Retail Leases Act apply?
- Is the lease still within its fixed term, or has it expired?
- What does the lease say about rent reviews, outgoings, repairs, breach notices and termination?
- What specific action is the other party demanding?
- Is there a deadline in a notice, a contractual clause or a relevant law?
If a termination notice, lockout threat or urgent application is involved, seek legal advice promptly. A mediation request does not automatically suspend a notice, preserve every legal right or prevent a deadline from expiring.
The official Retail Leases Act 1994 should be checked alongside the lease and the current guidance from the NSW Small Business Commissioner.
Common commercial lease disputes in Sydney
1. Disputed rent increases
A rent increase should be assessed against the lease and any applicable statutory restrictions. The key questions are whether the increase is permitted, how it has been calculated and whether the required procedure has been followed.
Check the rent review clause. It may refer to a fixed increase, a percentage, a consumer price index calculation or market rent. These mechanisms are not interchangeable.
For a disputed increase, request the landlord’s calculation and identify the clause relied upon. If market rent is involved, check whether the lease or legislation provides a process for determining or reviewing it.
Do not assume that an increase is unlawful merely because it is unaffordable or unexpected. Equally, do not accept a demand without checking its contractual and legal basis.
2. Threatened eviction or termination
A landlord’s warning is not necessarily the same as a legally effective termination. The notice, alleged breach, lease terms and applicable law must be considered together.
A tenant who receives a termination notice should:
- Keep the complete notice, including the date and method of service.
- Identify the breach alleged and the deadline stated.
- Compare the notice with the lease and any relevant statutory requirements.
- Obtain legal advice if the tenant disputes the breach or risks losing possession.
- Contact the NSW Small Business Commissioner about appropriate mediation assistance.
Do not ignore a notice while waiting for a mediation appointment. Urgent legal remedies may be necessary in some circumstances.
3. Repairs and maintenance
Disputes may arise over roof leaks, air conditioning, electrical problems, equipment, building defects or responsibility for maintaining particular parts of the premises.
The lease may allocate repair obligations between the parties. A tenant should not assume that every repair is the landlord’s responsibility, and a landlord should not assume that every defect is the tenant’s responsibility.
Record the problem with dated photographs, reports, invoices and written requests. Explain the practical impact on the business and request a response by a reasonable date.
Where a café’s operations are affected by a building defect, separate urgent safety or health issues from the financial disagreement. Obtain appropriate professional assistance if the premises may be unsafe.
4. Outgoings and additional charges
A tenant may dispute charges for building expenses, maintenance, insurance, cleaning or other outgoings. The first task is to identify what the lease permits the landlord to recover and what supporting information is available.
Request an itemised statement, relevant invoices and the calculation used to allocate the expense. Compare those records with the lease and any disclosure documents.
For a retail lease, check the applicable disclosure and statutory requirements as well as the wording of the agreement. A charge should not be treated as valid solely because it appears on an invoice.
5. Bonds and security
Retail lease security may take the form of a cash bond or a bank guarantee, among other arrangements. The rules and practical consequences differ by security type.
Keep the receipt, bank guarantee, bond records, final inspection photographs and correspondence about any proposed deduction. Ask the landlord to explain each disputed amount and identify the contractual basis for retaining it.
The NSW Government explains the retail bond arrangements and relevant security options in its retail leases guidance.
How to resolve a commercial lease dispute before NCAT
For many small businesses, a structured attempt to resolve the dispute is more practical than beginning with litigation. The following steps provide a starting point, although urgent legal action may be necessary where possession or another important right is at immediate risk.
Step 1: Collect the documents
Create one folder containing:
- The signed lease and any variations.
- The disclosure statement, where relevant.
- Rent and outgoings statements.
- Invoices, receipts and payment records.
- Notices, emails, letters and relevant text messages.
- Photographs, inspection reports and repair requests.
- A dated record of key conversations and events.
Use a simple chronology. Record what happened, when it happened, who was involved and which document supports the account.
A well-organised record can help both parties understand the actual disagreement and reduce time spent reconstructing events.
Step 2: Identify the precise issue
Separate the problem into clear questions. For example, a tenant may agree that rent is outstanding but dispute the amount of an additional maintenance charge.
That distinction matters. An unresolved invoice should not be allowed to obscure a separate disagreement about termination, repairs or a rent review.
Write down the outcome you want. It might be correction of a calculation, a repair date, a payment arrangement, a rent variation, release of security or an agreed lease exit.
Step 3: Make a written proposal
Where it is appropriate and safe to do so, write to the other party before escalating the dispute.
State the relevant clause or document, describe the disputed action, attach supporting evidence and propose a practical resolution. Give a reasonable response date, taking any formal deadline into account.
For example, a café tenant disputing an outgoings invoice could ask for an itemised breakdown and the documents supporting the calculation. The tenant could propose a meeting once the records have been supplied.
This is an illustrative example, not a reported legal case. It shows how to make a specific request instead of sending a general accusation.
Keep the tone factual. Avoid threats, personal allegations and admissions that have not been considered carefully.
Step 4: Contact the NSW Small Business Commissioner
If direct discussions stall, contact the NSW Small Business Commissioner’s mediation service.
The Commission assists with disputes between landlords and tenants involving shops, restaurants, offices, industrial premises and other commercial properties. Its team may help parties explore a resolution before formal mediation is required.
The application process asks for information about the parties and the dispute. Prepare the lease or contract and the key records that explain the issue.
The Commission states that there is no application or filing fee. Formal mediation has a separate fee, so confirm the current charges before booking.
For a retail lease dispute, ask the Commission what mediation requirements apply before proceeding to NCAT or a court.
Step 5: Prepare for mediation
Mediation uses an independent mediator to help the parties discuss the dispute and explore possible settlement terms. The mediator does not simply decide which party is right.
Before the session, prepare:
- A short summary of the dispute.
- The key documents and a chronology.
- Your preferred outcome and acceptable alternatives.
- A realistic assessment of costs, risks and business disruption.
- The people authorised to make decisions for each party.
A tenant seeking rent relief should support the request with relevant financial records. A landlord disputing that request should prepare the lease terms, payment history and any evidence needed to explain the position.
If the parties reach an agreement, record the precise terms in writing. Include amounts, due dates, repair obligations, notice arrangements, responsibility for costs and what happens if a party does not comply. Consider legal advice before signing a deed or other binding settlement.
Step 6: Obtain the mediation outcome record
If mediation does not resolve a retail lease dispute, ask the Commission about obtaining the certificate or other documentation needed to demonstrate that mediation was attempted.
Keep the document with the lease, evidence and correspondence. It may be required for the next formal step.
Not every commercial dispute follows the same statutory process. Confirm the correct requirements for the particular claim rather than assuming that a retail lease certificate is mandatory for every commercial contract dispute.
Step 7: Consider NCAT or a court
NCAT can determine retail lease disputes that fall within its jurisdiction. Its published guidance explains the orders it can make, the information required for an application and the usual mediation prerequisite.
Before filing, check:
- Whether NCAT has jurisdiction over the particular dispute.
- Whether mediation has been attempted or a statutory exception applies.
- The available remedy and any monetary limit.
- The applicable limitation period.
- Whether an urgent interim order may be necessary.
- The filing requirements and evidence that must accompany the application.
Some commercial disputes may need to proceed through a court or another legal process rather than NCAT. Obtain advice if the forum is unclear, the claim is complex or an urgent injunction is being considered.
Official guidance is available at NCAT’s retail lease dispute page.
How much does commercial lease mediation cost?
The NSW Small Business Commissioner describes its mediation service as a lower-cost alternative to court proceedings.
Its published mediation FAQ states that the application itself has no fee and that formal mediation costs $330 per party for up to four hours. These charges should be checked on the official website immediately before publication or booking because fees can change.
Do not confuse the cost of mediation with the potential cost of legal advice, expert reports, tribunal applications or subsequent court proceedings. Those expenses depend on the matter.
A business with limited funds can start by organising its records and asking the Commission about the process. If a notice threatens possession or a deadline is imminent, the cost of obtaining prompt legal advice should be weighed against the consequences of delay.
Case study: How a Sydney gym negotiated a rent reduction
The NSW Small Business Commissioner publishes a case study about a Sydney gym whose business was badly affected during the COVID-19 restrictions in 2020.
The case study uses the name Andrew, which the Commission states has been changed. It reports that the gym’s sales fell by 80 per cent. After initially granting a three-month rent waiver, the landlord declined a request for further relief.
Both parties agreed to mediation. During the first session, the tenant sought a further waiver while the landlord questioned the accuracy of the financial information. The mediator adjourned the process so the tenant could provide further evidence of the decline in turnover. At the second session, the parties were able to better understand each other’s financial positions and reach a resolution that provided greater financial certainty.
The published account does not establish a universal outcome for tenants or landlords, and it does not provide a basis for promising that mediation will secure a rent reduction in another case.
The useful lesson is procedural: a clear request backed by credible financial records can help a mediator move a disagreement from competing assertions towards practical settlement options.
Read the original account: How a Sydney gym negotiated a rent reduction.
Evidence checklist for Sydney landlords and tenants
Before mediation or a formal application, use this checklist to identify gaps in your records.
| Evidence | Why it matters |
|---|---|
| Signed lease and variations | Establishes the contractual terms and any changes. |
| Disclosure statement, if applicable | Helps assess relevant retail lease information and obligations. |
| Rent ledger and bank records | Shows amounts charged, paid or disputed. |
| Outgoings invoices and calculations | Helps test the basis of additional charges. |
| Notices and proof of service | Establishes what was communicated and when. |
| Photographs and repair reports | Documents the property’s condition or an alleged defect. |
| Emails and letters | Shows the requests, responses and efforts to resolve the matter. |
| Financial records | May support a request for temporary relief or a payment arrangement. |
| Chronology of events | Helps the mediator or decision-maker follow the dispute. |
Do not alter original records. Keep copies of important communications and record dates accurately. If you provide sensitive financial information, confirm how it should be submitted and handled by the relevant organisation.
Where to get official help
Start with the source that matches your problem.
- NSW Small Business Commissioner: information and mediation for retail and commercial lease disputes.
- NSW Government retail lease guidance: information about retail tenancy obligations, security and common issues.
- NCAT: information about retail lease applications, available orders and evidence requirements.
- NSW legislation register: the current Retail Leases Act 1994 and any applicable amending legislation.
A landlord or tenant who faces a serious termination dispute, an urgent possession issue or a substantial financial claim should consider independent legal advice. Government mediation is not a substitute for advice on the merits of an individual legal claim.
Conclusion
A commercial lease dispute in Sydney does not always need to begin with tribunal proceedings. The sensible first steps are to identify the applicable lease rules, organise the evidence, make a specific written proposal and contact the NSW Small Business Commissioner when direct negotiation is not working.
For a retail lease claim, mediation is generally an important step before NCAT. If the matter remains unresolved, check the correct jurisdiction, deadlines and remedies before filing.
The objective is not to delay a difficult dispute. It is to make the next decision with clear records, a realistic proposal and an accurate understanding of the legal process.
Editorial note: This article provides general information about NSW commercial leasing processes. It is not legal advice. Check current legislation and official fees before acting on a specific dispute.
1. How do I resolve a commercial lease dispute in NSW?
Check the lease, organise the relevant documents, make a clear written proposal and contact the NSW Small Business Commissioner if direct negotiation fails. For a retail lease claim, mediation is generally required before applying to NCAT, subject to exceptions and the particular remedy sought.
2. Is mediation compulsory before NCAT for a retail lease dispute?
Mediation through the NSW Small Business Commissioner is compulsory for most retail lease claims before NCAT. NCAT identifies an exception for applications seeking an order in the nature of an injunction. Check the tribunal’s current requirements for your particular application.
3. Can a commercial landlord evict a tenant immediately?
Do not assume that a landlord’s demand or warning means the tenancy has been lawfully terminated. The lease, alleged breach, notice requirements and applicable law all matter. If a termination notice or lockout threat is imminent, obtain prompt legal advice rather than waiting for mediation.
4. Can a landlord increase commercial rent whenever they want?
Not necessarily. The permitted increase depends on the lease terms and any applicable statutory restrictions. Check the rent review clause, calculation method and required procedure before accepting or challenging the demand.
5. How much does NSW commercial lease mediation cost?
The NSW Small Business Commissioner’s published FAQ states that there is no application or filing fee and that formal mediation costs $330 per party for up to four hours. Verify the current fee on the Commission’s official website before applying.
6. What evidence should I bring to lease mediation?
Bring the signed lease and variations, relevant disclosure documents, rent and outgoings records, notices, correspondence, photographs, repair reports and a dated chronology. If the dispute concerns rent relief, include relevant financial records supporting the request.
7. What happens if mediation does not resolve the dispute?
Ask the Commission about the certificate or other record needed to show that mediation was attempted. Then confirm the correct forum, jurisdiction, available remedies and filing deadlines. Depending on the dispute, the next step may be NCAT or a court.
8. Can a café tenant dispute repair or maintenance charges?
Yes, a tenant can dispute a charge or responsibility that they believe is inconsistent with the lease or applicable law. The tenant should identify the relevant clause, request supporting invoices or reports and explain the specific disagreement. The outcome depends on the lease and the facts.
9. Can a landlord use a retail lease bond to cover unpaid rent?
The applicable rules depend on the type of security, the lease and the circumstances. The NSW Government explains that security may be used to cover amounts owed or property damage where the relevant conditions are met. A disputed deduction should be assessed against the lease and applicable requirements.
10. Can a tenant stop paying rent because of a dispute?
Withholding rent without a valid legal basis or agreement can create additional risks, including a possible breach of the lease. A tenant should obtain advice before withholding payment and consider whether a written payment arrangement or mediation is appropriate.
11. Where can a Sydney business owner get help with a commercial lease dispute?
The NSW Small Business Commissioner provides information and mediation for retail and other commercial lease disputes. NCAT provides guidance on retail lease applications. A solicitor or community legal service may be appropriate when the dispute involves urgent termination, a complex legal issue or substantial financial exposure.
12. Does the Retail Leases Act 1994 cover every commercial property in NSW?
No. The Act applies to qualifying retail leases; not every office, warehouse, industrial property or other commercial arrangement is necessarily covered. Identify the type of premises, lease and relevant legal provisions before relying on a particular retail tenancy protection.
