Commercial leases and the false economy of doing it yourself


A recent decision of the State Administrative Tribunal (“SAT”) has highlighted the dual risks of using off-the-shelf downloadable templates for commercial leases and failing to obtain proper legal advice. The case also demonstrates the pitfalls of self-managing commercial property, particularly in the context of highly regulated retail assets.

Mistelle Bickley Pty Ltd and Sykes [2024] WASAT 41 involved a dispute between a landlord and the former tenant of restaurant premises situated on a portion of a 6.84 hectare vineyard property. The SAT’s decision came over one-and-a-half years after the tenant vacated.

The dispute was also the subject of a preliminary decision,[1] in which the SAT confirmed that the lease in question was a “retail shop lease” for the purposes of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (“Retail Shops Act”).

Much of the controversy stemmed from the fact that the tenant was “the author of the Lease which he prepared from a template … he downloaded from the Internet”, and the lease document failed to adequately cater to the parties’ specific bargain, including in relation to the delineation of common areas, the apportionment of various outgoings and utilities, the payment of turnover rent, and the scope of tenant make good obligations. It appears that neither party obtained legal advice in relation to the lease, which lead to the landlord neglecting to issue a disclosure statement and tenant guide, and failing to secure a signed notice of election from the tenant in relation to turnover rent. The issues were likely compounded by the landlord’s decision to self-manage the premises.

In the result, when a dispute arose between the parties at the end of the lease, and attempts by the Small Business Development Corporation to help resolve the dispute failed, the tenant sought the SAT’s determination on a wide range of issues.

The tenant’s application included claims for repayment of a proportion of shared outgoings and utilities, compensation for non-provision of a disclosure statement, repayment of turnover rent, and the return of a $10,008 security deposit.

In the course of reaching its decision, the SAT was required to undertake an analysis of the Retail Shops Act provisions regulating the apportionment of “operating expenses”.[2] Interestingly, the SAT decided that the tenant was still liable to pay the “relevant proportion”[3] of shared outgoings and utilities in circumstances where the lease failed to “set out [how the tenant’s usage] (for electricity and toilets) is to be determined in order to calculate what [the tenant] is obligated to pay”. That is despite the fact that section 12(1)(a)(i) of the Act excuses a tenant from liability to pay an amount on account of outgoings where “the retail shop lease does not specify … how that amount is to be determined and, when applicable, apportioned to the tenant”.

Although the SAT found in favour of the tenant on multiple fronts (in a decision spanning 90 pages), the net outcome was that the landlord was ordered to pay only $10,787.67. This amount was only marginally greater than the tenant’s security deposit.

The case underscores the potential false economy of “saving” legal costs in commercial lease transactions. Here, whatever savings the parties may have achieved at the outset by using an online lease template and eschewing legal advice will have been far outweighed by the lost time and stress associated with SAT proceedings that ultimately yielded a minimal benefit to the successful party.

If you need advice in relation to retail and commercial leasing matters, please contact our firm principal, Shannon Davies.


This post has been prepared as a general summary only. It is not, and is not intended to be, legal advice with respect to any particular matter. This post should not be relied on with respect to any particular matter without taking legal advice. Stork Davies Legal Advisors disclaims liability to any person who relies on this post without taking legal advice from the firm.

[1] Mistelle Bickley Pty Ltd and Sykes [2023] WASAT 69, applying Sharp v O’Driscoll, unreported; FCt SCt of WA; Library No 970111 21 March 1997.

[2] This is the terminology used by the Retail Shops Act in lieu of “outgoings” or “variable outgoings”.

[3] This is generally the maximum outgoings proportion that a retail shop lease tenant is liable to pay: see section 12(1)(b) of the Retail Shops Act, and the definition of “relevant proportion” in section 12(3).