Mediation in action: resolving a commercial lease dispute

Even well-intentioned business arrangements can become complex. A recent dispute between a property owner and a medical tenant highlights how mediation can deliver practical, fair outcomes.

A doctor leasing a commercial suite initially appeared to be a strong, reliable tenant. However, over time, small but recurring rent arrears and irregular payments created uncertainty for the property owner, who depended on consistent income to meet mortgage obligations.

As the lease approached its end, arrears had accumulated and the situation escalated when the premises were vacated without notice. The owner was left concerned about outstanding payments and the future of the tenancy.

The managing agent contacted the NSW Small Business Commission, with mediation arranged within weeks.

Mediation provided a structured and neutral setting for both parties to share their perspectives. Importantly, it revealed underlying issues that had not been previously communicated. The tenant explained that establishing a private practice in a new location had been financially challenging. Patient demand had been slower than expected, surrounding vacancies impacted foot traffic, and rising operating costs created significant pressure.

For the owner, the focus was on recovering outstanding amounts and resolving the matter without prolonged legal action.

Through the mediation process, both parties shifted from frustration to resolution. A practical agreement was reached, including a structured repayment plan for arrears and arrangements to support re-letting the space, including transfer of the fit-out and promotion of the vacancy within the tenant’s network.

While not a perfect outcome for either party, mediation enabled a fair and workable resolution - avoiding escalation and providing certainty.

This case demonstrates the value of the NSW Small Business Commission’s mediation services in helping businesses resolve disputes quickly, cost-effectively, and with outcomes that allow all parties to move forward.