There is nothing more exciting and more anxiety provoking than starting your own retail business. For those whose dream it is to have their own small business, renting a space is the place to begin. But what happens when your retail tenancy bumps up against lease and landlord issues? There are avenues available to settle these minor differences before embarking on a long and expensive court experience.

Initially, it is important to know that a retail lease is covered by the Retail Lease Act 1994, specifically section 31. A disputed retail lease is covered in section 68 of the Act which states;

68 Disputes and other matters must be submitted to mediation before proceedings can be taken;

(1) A retail tenancy dispute or other dispute or matter referred to in section 65 (1) (a1) may not be the subject of proceedings before any court unless and until the Registrar has certified in writing that mediation under this Part has failed to resolve the dispute or matter or the court is otherwise satisfied that mediation under this Part is unlikely to resolve the dispute or matter.

(2) The Registrar must certify that mediation under this Part has failed to resolve a retail tenancy dispute or other dispute or matter referred to in section 65 (1) (a1) if the Registrar is satisfied that any one or more of the parties to the dispute or matter has refused to take part in or has withdrawn from mediation of the dispute or matter.

(3) This section does not apply to proceedings before a court for an order in the nature of an injunction.

(4) This section does not operate to affect the validity of any decision made by a court.

And while this information may seem overwhelming, in its simplest form it means that if you have a retail dispute, mediation is the best first option for settling the issues between the tenant and the landlord. However, it must be noted that mediation is not mandatory. Instead, if the court determines that mediation is unlikely to solve the issues, leave can be granted to file directly with the court.  

This has been further reinforced in the Fordham Laboratories Pty Limited v Sor & Anor [2011] NSWSC 706 (8 July 2011), the Supreme Court of NSW said that the requirement to mediate is not a condition precedent to the commencement or continuation of proceedings, but that the court may not proceed to hear and determine the dispute unless satisfied that mediation under section 68 is unlikely to resolve the dispute.

Many people have a vague idea of what the mediation process entails. When choosing mediation as an avenue for dispute resolution here are some things it is good to understand;

  1. Mediators are impartial to both parties
  2. The cost is less than going to court
  3. Time can be spent in more than one setting or meeting to produce a final compromise
  4. Parties are motivated as mediation is voluntary
  5. Certain outcomes can be achieved allowing the parties to have closure
  6. The relationship between the parties can be better preserved allowing for the business relationship to continue

Deciding to use mediation as a means of compromise and settlement offers tremendous advantages some of which include;

  • Narrowing down the issues
  • Increasing the focus on what actually needs to be resolved
  • Honing in on the relevant facts
  • Bringing to light new information and perspectives
  • Cost savings for all parties involved
  • More creative solutions

Mediation also provides certain protections. It is confidential therefore no bad publicity can come from participating in mediation. Also, nothing in mediation can be used in a connected future court proceeding. The parties can feel free to openly and honestly express their conflicts and concerns and offer a variety of plausible solutions without concern for being held to those ideas presented in a future court proceeding.

In a perfect world, business would thrive and disputes would not arise. However, there are times when tenancy issues arise and cannot be solved by the parties alone. In those instances, an impartial third person, such as a mediator, can make a big difference in helping parties resolve their differences in a more expedient and cost-effective manner.

If you find yourself in need of assistance with this or any other legal issue, please contact the law offices of Owen Hodge Lawyers. At Owen Hodge, we are always happy to assist clients in understanding the full ramifications of any and all of your legal needs. Please feel free to call us at your earliest convenience to schedule a consultation at 1800 770 780.