Leaking Roof Disputes in a Commercial Lease

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Leaking Roof Disputes in a Commercial Lease

In the 2025/26 financial year the Queensland Small Business Commissioner (QSBC) held mediations for multiple cases involving leased commercial premises with leaking roof issues. In each of those disputes the circumstances, the lease agreements, the strategies to resolve the issues, the parties’ relationships and ultimately the outcomes were all different.

This article will provide information on some important legislation to consider, what questions to ask and evidence to gather and why applying for mediation might save everyone involved time and money and avoid lengthy legal battles.

If you’re in a dispute with your lessor, it’s important to approach the situation professionally and understand your rights and obligations under the lease. If your dispute relates to the lessor’s obligations under the lease, consider the following steps:

Start with a conversation: Attempt to resolve the issue through open communication and negotiation. Use facts and evidence to back up your position and strengthen your bargaining position.
Discuss mediation with the other party: Explain that you are keen to use mediation rather than litigation to resolve the dispute in the first instance. This can demonstrate that you are serious but willing to work with them to find a viable solution.
Use court or tribunal as your last resort: QSBC Mediator and Negotiation Expert, Nicole Davidson has written this article that may help you reflect on the costs: How Much Does it Cost to Litigate a Small Business Dispute?

Understand what applies in your situation

Understanding your lease is a crucial first step. You should also seek advice as to whether the following applies to your situation:

Retail Shop Leases Act 1994 (RSL Act) (particularly sections 42, 43 (especially subsections 1 (c and d), 43AB, section 44 and 44A) and/or the
Property Law Act 2023 (potentially Schedule 1 (item 4)
Any principles at law or previous court or tribunal decisions

A clause in a retail lease that goes against provisions of the RSL Act is prohibited (under Section 16 of the RSL Act).

If you are wondering ‘Do I have a retail shop lease?’ then read our article What is a Retail Shop Lease in Queensland.

What to Ask a Solicitor When Seeking Advice About a Roof Leak

Seeking legal advice (especially when you are unsure of what applies in your situation) can strengthen your negotiating position. We have some information in this article about Seeking Legal Advice: Your Compass in Dispute Resolution – Queensland Small Business Commissioner including information about a service that may offer a free legal advice session for small businesses.

Below is a list of example questions to help guide you when speaking to a solicitor about your dispute:

Which legislation applies to this matter?
Which clauses in my lease are relevant in this situation and what do they mean?
Are there alternative options to resolve this dispute before pursuing legal action in a court or tribunal?
Could I issue a notice to remedy breach to the landlord? How do I do this lawfully?
Do I have enough evidence to support a favourable decision in a tribunal or court?
What additional evidence could strengthen my case?
What is the best way to lodge this: with QSBC, a court or tribunal?
What are the timeframes, processes, and costs involved?
Do I have a retail shop lease or a commercial (non-retail lease)?

Rent Abatement Compared to Loss of Stock or Damage to Fit Out

When you look through your lease and seek legal advice, you should confirm whether you are required under your lease to have appropriate insurance for your stock or fit out. The Queensland Small Business Commissioner (QSBC) has seen most leases contain a clause requiring the tenant to insure against damage to their stock or fit out. This may limit the lessor’s liability to pay compensation for replacement of stock or damage to equipment/fit out even if the damage is the result of a failure of something that may be under the lessor’s responsibility (for example: a leak in the roof). Each situation is different, and therefore getting expert advice on your lease is critical.

Gather evidence, prepare a proposal

If you believe you are entitled (under your lease or legislation) to rent relief (also known as a rent abatement), then put a proposal to the landlord, their agent or the shopping centre manager for consideration. This is usually the first step in negotiating an agreement on rent relief or compensation.

Notify the landlord of the damage or loss of access in writing as soon as possible.
Take (and send) photos and videos of the whole premises (needed to calculate the area that is usable vs unusable).
Find and keep the receipts for any damaged goods for potential insurance claims (or claims against the landlord if permissible under your lease).
Get expert evidence or reports to find the cause and the impacts of the leaks. Get any reports or advice in writing especially if the impact is invisible – e.g. bad smells, loss of electricity or equipment failure. Ask your own experts specifically about the possibility of the leak leading to mould and/or structural damage. That allows you to highlight these to the owners and explain the urgency of having repairs attended to quickly to avoid both parties even more costs.
Seek help in calculating the loss and/or reduction in rent that you will ask for (call your accountant or if in financial hardship – the Small Business Debt Helpline on 1800 413 828 who may assist in calculations). This step creates a justifiable calculation of the figures in your proposal and as you’ll read in the example cases plays a crucial role in a court or tribunal determining damages.
Send a proposal to the landlord or agent in writing with your evidence, any potential further impacts if not rectified and state a reasonable time you’d expect to get a response.
Prepare to negotiate and if that fails apply for mediation with the QSBC.

What If Negotiations Get Stuck?

If you’ve tried to reach an agreement with your landlord and negotiations have stalled, you can apply for mediation through the Office of the Queensland Small Business Commissioner.

Mediation is a low-cost, confidential process to help landlords and tenants resolve disputes without going to court. A trained mediator facilitates the discussion using a series of steps to guide both parties through the negotiation and help them explore practical solutions.

The Queensland Small Business Commissioner (QSBC) or the QSBC mediator cannot determine if rent abatement or compensation applies or determine the amounts. Applying for mediation with the QSBC is the first step in the dispute resolution process under the Retail Shop Leases Act 1994 for determining the amount of compensation (section 44). Applying for mediation for a (non-retail) small business lease dispute is an optional step before a party applies to court.

What If I Am in Dispute with the Landlord? Can I Withhold Rent or Outgoings?

Withholding rent or outgoings in breach of your lease is unlikely to resolve the dispute. In fact, it often escalates the situation and may result in the lessor issuing you a notice to remedy the breach, which is typically the first step towards terminating the lease.

Can I Breach my Commercial Landlord?

You could seek legal advice about serving the lessor with a notice to remedy breach. This notice could outline the lessor’s failure to meet their obligations and indicate that, if the breach isn’t resolved within a reasonable timeframe, you may take further action (e.g., withholding part or all of the rent or outgoings or terminating the lease).

If you’re considering issuing a breach notice or withholding rent or outgoings, it’s critical to proceed with caution:

Follow the legal process and comply with the terms of your lease.
Provide proper notice to the lessor, recognising that if a court or tribunal found you relied on a defective notice or you issued it invalidly, you may be found liable for damages.
Avoid breaching the lease yourself by acting unlawfully or without due process.

We strongly recommend seeking legal advice before taking any action to ensure you fully understand your rights and responsibilities.

Terminating a Lease under the Retail Shop Leases Act or Provisions of the Lease

There may be options to terminate a lease, if the lease allows this, if certain conditions are met. You should seek legal advice about your options in your specific circumstances because leases typically are bespoke and case law or principles at law may also apply.

The Retail Shop Leases Act 1994 (the Act) includes specific sections that may allow a retail shop tenant to terminate the lease early. For instance, if the lessor has failed to comply with disclosure obligations (see section 21F of the Act) the tenant may terminate a retail shop lease by giving a signed written notice to the lessor within 6 months after the tenant has entered the lease. Subsection 21F(5) states the lessor is liable to pay the tenant reasonable compensation decided by way of the dispute resolution process. That dispute resolution process starts with mediation at the QSBC.

What if the Roof Leak is Urgent and the Landlord Refuses to Act?

Before a retail shop lease dispute is mediated with the QSBC or considered further by QCAT, if a situation emerges that requires urgent action, the Queensland Civil and Administrative Tribunal (QCAT) can make an interim/injunction order. Read our article on Understanding interim injunction orders in lease disputes for more information. If you apply to QCAT for a retail tenancy dispute you will need to provide evidence of your application for mediation to the QSBC – usually a copy of the submitted form sent from us or the reference number for your application for mediation.

QCAT Does Not Have the Power to Hear Commercial (non-retail shop) Leasing Disputes.

If you bring a commercial leasing dispute to QCAT, it may be dismissed. Courts hear matters related to non-retail leasing and you should seek advice on which court has jurisdiction to hear your dispute.

Importantly, the resources and information in this article are not legal advice and are not intended to be a substitute for legal advice and should not be relied upon as such. You should Seek Legal Advice to understand the implications and options for your specific situation.