Recent decisions across the Victorian Civil and Administrative Tribunal (VCAT), the Supreme Court of Victoria, and the High Court of Australia highlight three clear themes in current leasing law: 

• Landlords who overreach their claims against their tenants risk significant damages
• Tenants face limited, but real, opportunities to challenge valuations and lease enforcement
• Courts expect clearly expressed documentation and strict compliance with contractual rights and obligations, while taking a pragmatic approach to covenants and valuations.

We provide a high level overview and key takeaways of each decision for those active in the sector.

Landlord Conduct & Damages 

Cristiano v Prime Kwality Foods Pty Ltd [2025] VCAT 580

In this case the landlords terminated a warehouse lease after rental arrears remained unpaid. They then retained the tenant’s goods, including a delivery van and racking. VCAT found arrears of $19,560 were payable but held that retention of goods was an unlawful conversion, awarding the tenant $98,827 in damages –  far exceeding the arrears.

Takeaway: Landlords cannot simply retain tenant property after termination. Statutory procedures for abandoned goods must be followed or landlords risk significant conversion damages. 

Relief from Forfeiture 

Paramount Investments Group v Club Fogolar Furlan Melbourne [2025] VSC 90

The Supreme Court considered whether VCAT could extend the time allowed for a tenant to comply with conditions attached to relief from forfeiture. Justice Croft held that while VCAT generally cannot vary final orders, its equitable jurisdiction under s89 of the Retail Leases Act permits an extension if circumstances justify it. Importantly, re-entry clauses are to be viewed as security for landlords to ensure rent is paid, rather than to penalise tenants. 

Takeaway: Tenants may benefit from extensions of time to comply with relief conditions if equity supports it, but they must show good reasons. Landlords should expect re-entry rights to operate as financial security rather than punishment. 

Rent Review Challenges 

Oasis Bakery Pty Ltd v Theodosiou [2025] VCAT 632

A tenant challenged a rent determination after the valuer included external areas beyond the leased premises. Senior Member Forde held this was a serious error under s37 of the Retail Leases Act and set the determination aside.

Takeaway: Rent reviews must strictly reflect the leased premises. External benefits cannot be included.

Supreme Bay Pty Ltd v Ventofond Pty Ltd [2025] VCAT 723

A hotel tenant challenged a rent valuation, alleging errors under the Retail Leases Act. Deputy President Riegler dismissed the challenge, confirming the determination was binding. The Tribunal confirmed that expert valuations will usually be upheld unless there is an obvious and serious mistake.

Takeaway: Rent determination challenges rarely succeed without manifest error. 

Dalziel v Veev Pty Ltd [2025] VCAT 681

The landlord attempted to overturn a rent determination, arguing that inadequate reasons were given. Senior Member Forde reaffirmed that determinations will only be set aside for fraud, collusion or manifest error. The Tribunal confirmed that valuers do not need to provide detailed explanations, as brief reasons can still be valid. Concise reasoning was sufficient and the determination stood. 

Takeaway: Expect rent determinations to stand unless there is a clear statutory breach. 

Lease Documentation & Security Deposits 

Yuen’s Family Investments v Advance Chinese Massage [2025] VCAT 682

The landlord claimed almost $20,000 in unpaid rent under a supposed 2014 lease. The only document produced was a torn-out lease schedule with minimal terms. Deputy President Lulham dismissed the claim, finding the document inadequate to create a binding lease or guarantee. The VCAT ruling made it clear that time in occupation was not enough to establish a valid lease; proper documentation and statutory compliance were required.

Takeaway: Incomplete or informal lease documents are unenforceable. Formal lease documentation is critical. 

Barci v Kovsan Pty Ltd [2025] VCAT 709

A tenant sought return of her $5,000 security deposit, plus interest and other costs. VCAT ordered repayment of $3,846, rejecting overstated landlord deductions and confirming that tenants cannot recover compensation for their own time spent. 

Takeaway: Landlords must justify deductions. Tenants cannot recover personal time costs. 

Covenants & Valuation 

Merrifield Corporation v FAL Mickleham (No 2) [2025] VSC 390

The dispute centred on a restrictive covenant in Merrifield Business Park preventing dual occupancies without consent. Justice Harris held the covenant enforceable as it touched and concerned the land by affecting amenity, not competition. However, an implied term required that consent not be unreasonably withheld. The Court modified the covenant under s84 of the Property Law Act to permit dual occupancies.  

Takeaway: Restrictive covenants remain enforceable, but Courts will modify them if fairness and reasonableness require. 

Valuer-General v WSTI Properties [2025] HCA 23

The High Court clarified the treatment of 'improvements' under the Valuation of Land Act 1960 (Vic). The Court held that whether works increase land value must be judged at the valuation date, not when works were completed. As the Court put it: 'Improvements are those works whose effect increases the value of the land and whose benefit is unexhausted at the time of the valuation.' 

Takeaway: Site value must be assessed by considering improvements whose benefits remain at the valuation date, recalibrating land tax and rating assessments, particularly for heritage sites. 

Conclusion 

These cases highlight a clear trend in that strict compliance with leasing law and careful documentation are essential. Courts and tribunals remain pragmatic but will intervene to ensure fairness in covenants and valuations. For landlords, the risks of overreach are significant. For tenants, narrow but genuine opportunities exist to challenge or recover losses. 

If you are negotiating a lease, considering a rent review challenge, or concerned about your leasing position, contact our Property & Development team today to ensure your agreements and valuations are watertight.

Further information / assistance regarding the issues raised in this article is available from the author, Darren Marx, Partner or your usual contact at Moray & Agnew.