Make good clauses in Queensland under the Property Law Act 2023
Make good clauses set the condition in which a tenant must return commercial premises, including any required repairs, removal of fit-out and reinstatement of alterations. Queensland’s Property Law Act 2023 has not abolished the statutory limit on repair damages. Section 178 retains that protection. The real questions are what the lease requires, whether the claim falls within section 178, and what loss the landlord can prove.
The Property Law Act 2023 (Qld) commenced on 1 August 2025, as confirmed by Queensland Crown Law. For landlords and tenants reviewing make good clauses, the new legislation calls for an accurate reading of the current provisions. It does not justify a blanket demand for every dollar in a reinstatement quotation.
A useful assessment separates the work promised under the lease from the remedy available if that work is not done. Those questions overlap, but they are not interchangeable. A tenant should not assume that a possible limit on damages gives permission to ignore its obligations. A landlord should not assume that proving a breach establishes the amount recoverable.
What make good clauses actually require
There is no single commercial standard that applies to every lease. One tenant may only have to clean the premises and repair damage. Another may have to remove partitions, counters, cabling and equipment, then restore building services to an agreed configuration. Stonegate Legal’s guide to make good obligations in commercial leases examines that broader range of obligations.
Read make good clauses alongside the repair covenant, alterations provisions, fit-out approvals, plans, incentive deed and any variations. A landlord’s approval of an installation should expressly address what happens to it at lease end. Permission to install a partition and agreement to retain it permanently are different commitments.
The practical starting point is an itemised scope. For each disputed item, identify the clause said to require the work, the relevant condition or approved configuration, and the evidence of non-compliance. A photograph of worn carpet cannot answer whether the tenant promised to replace all carpet regardless of condition. That answer comes from the documents.
| Obligation | Question to resolve | Useful evidence |
| Repair damage | What deterioration breaches the repair standard? | Entry and exit photographs, maintenance records |
| Remove tenant fit-out | Which installations must be removed? | Ownership records, fit-out plans, approvals |
| Reinstate alterations | What configuration must be restored? | Original drawings and written consent conditions |
| Repaint or replace finishes | Is this an express obligation independent of damage? | Lease wording, schedules and specifications |
| Pay instead of carrying out works | Is payment an agreed alternative and how is it calculated? | Election clause or signed settlement |
The statutory limit on damages for make good clauses remains
Section 178(1) applies to a lessor’s proceeding for damages for breach of an obligation to keep or put premises in good repair during or at the end of a lease. Under section 178(2), the award cannot exceed the lesser of the diminution in the value of the reversion and the actual cost of remedying the breach.
The reversion is the landlord’s interest in the property subject to the lease. Its diminution is a valuation question, rather than simply the total of a contractor’s proposed works. When reviewing a claim under make good clauses, consider obtaining valuation advice as well as building cost advice. The experts address different questions.
Section 178(3) also prevents repair damages where the tenant proves demolition has occurred or will occur, or qualifying structural alterations make the remedial cost of no or insufficient value. Evidence of a redevelopment proposal therefore deserves attention; an unsupported suggestion that the landlord might redevelop is much weaker.
Hypothetical example of repair costs and property value
Assume a warehouse tenant breaches a repair obligation. Properly scoped remedial works cost $80,000, but reliable valuation evidence establishes that the breach reduces the value of the landlord’s reversion by only $25,000. If section 178 applies, $25,000 is the ceiling for damages for that repair breach. It is not an automatic award: liability and the recoverable loss still need to be established.
This example shows why make good clauses disputes cannot always be resolved by collecting competing builder quotations. A cheaper quote may narrow the disagreement about cost while leaving the decisive valuation issue unanswered. Before spending heavily on experts, identify which measure of loss the claim actually engages.
Repair and reinstatement need separate analysis
“Make good” is a convenient umbrella expression. It can conceal several promises with different legal consequences. Do not assume that section 178 covers every obligation found under a heading called “Make Good”, or that renaming a repair covenant “reinstatement” takes it outside the section. The substance of the obligation and the breach matter.
A claim concerning damage to existing premises may raise a different question from a claim concerning failure to remove an otherwise sound tenant installation. An allegation of unauthorised alteration may also require separate consideration. For mixed claims under make good clauses, divide the schedule into distinct categories rather than treating the whole demand as one repair bill.
That division should continue through settlement negotiations. Ask whether the landlord is claiming repair costs, removal costs, an agreed payment, loss of rent or some combination. The relevant contractual basis and supporting evidence should be identified for each component. The broader principles are discussed in Stonegate Legal’s guide to breach of contract in Queensland.
Case example one Tabcorp and unauthorised alterations
In Tabcorp Holdings Ltd v Bowen Investments Pty Ltd [2009] HCA 8, the tenant substantially altered a Melbourne building’s foyer without the required written consent. The High Court upheld a $1.38 million award comprising restoration costs and associated loss of rent: see [1]–[7] and [27].
The relevant breach was the covenant against unauthorised alterations. At [13]–[20], the Court explained why reinstatement could protect the promised performance even where the alteration caused little diminution in property value. A cost exceeding the diminution did not itself make reinstatement unreasonable.
For make good clauses in Queensland, Tabcorp is a warning against assuming that an attractive replacement fit-out cures an unauthorised alteration. It is not authority that section 178 has disappeared or that every Queensland repair claim attracts full reinstatement costs. The statutory question must still be addressed.
Case example two Bellgrove and the proposed remedy
Bellgrove v Eldridge [1954] HCA 36; (1954) 90 CLR 613 concerned defective construction of a house, not a commercial lease. The defects threatened its stability. Demolition and rebuilding were accepted as the necessary and reasonable remedy.
At 617–619, the High Court explained that rectification work must be necessary to produce contractual conformity and reasonable to undertake. The decision supplies part of the common law reasoning later applied in Tabcorp. Its relevance to make good clauses is the need to justify the remedial scope against the contractual promise. It does not displace a statutory restriction on damages.
The default lease terms must be checked against the agreement
Section 139(1) and (2) implies the Schedule 1 standard terms, subject to legislation and contrary agreement. Schedule 1 clause 3 addresses maintenance and surrender, with exclusions for reasonable wear and tear and specified damaging events, qualified where conduct prevents insurance recovery. Clause 12 addresses removal of tenant-owned items, removal damage and abandoned items.
Those are clauses in a schedule, not sections 3 and 12 of the Act. Make good clauses should be reviewed against the actual agreed terms; do not assume the default exclusions survive unchanged. Nor should the one-month abandonment mechanism be treated as an automatic extension of the tenant’s handover deadline.
For an older lease or a breach spanning commencement, check the legislation applicable to the relevant events and any preserved rights. The enactment of the new Act is not a reason to disregard the lease’s history. Keep the original lease, renewal documents and variations together.
Negotiating make good clauses before signing
The most useful drafting identifies the required outcome. “Original condition” can be uncertain where the tenant receives a partly fitted space, takes an assignment, or completes works before formal possession. Attach a dated condition report and plans. Record pre-existing defects and identify installations that belong to the landlord.
Make good clauses should also answer who decides which approved works remain, when that decision must be communicated, and what happens if the landlord changes its instructions. A late direction to remove specialist services can make compliance expensive or impracticable within the remaining time. Agree the decision process while both parties still have room to negotiate.
Tenants can propose a defined scope, exclusions, a negotiated cap or an agreed payment alternative. Landlords should test whether those proposals preserve the condition needed for the next letting. Stonegate Legal’s commercial lease review guide places those negotiations alongside rent, incentives, security and renewal rights.
| Drafting issue | Landlord priority | Tenant priority |
| Starting condition | Reliable record of the premises supplied | Exclude existing defects and landlord property |
| Retained installations | Timely choice about useful fit-out | Written release from removal obligations |
| Work standard | Defined materials and competent contractors | Avoid unspecified upgrades |
| Timing and access | Clear completion and handover dates | Enough access to complete the agreed work |
| Payment alternative | Clear election and calculation method | Certainty about the liability discharged |
| Security release | Account for supported outstanding claims | A deadline and process for returning the balance |
Hypothetical example of a retained café fit-out
A café tenant installs counters and exhaust equipment with approval. The lease requires their removal, but the incoming tenant wants to use them. The outgoing tenant and landlord agree that those identified items can remain.
The agreement should state precisely which obligations under the make good clauses are released. It should also address remaining damage, cleaning, ownership or transfer arrangements and security. A short email saying “leave the fit-out” leaves too much room for disagreement about whether repainting, removal of redundant cabling or repairs are still required.
A negotiated payment needs the same care. Identify whether it settles only the fit-out issue or all end-of-lease claims. Record GST treatment, payment timing and any agreed release of guarantors. Stonegate Legal’s guide to exiting a commercial lease early in Queensland explains why surrender arrangements need to address continuing liabilities expressly.
Proving a claim under make good clauses
Prepare a defect schedule before exchanging broad assertions about the premises. Include each item, the contractual obligation, the alleged departure, the proposed remedy and the amount claimed. Keep contractor estimates separate from valuation conclusions. A large total without that breakdown is difficult to assess and expensive to litigate.
Photograph the premises before demolition or rectification removes the evidence. Retain original files, approvals, correspondence, inspection notes and invoices. An expert should receive the relevant lease provisions and plans; otherwise the report may cost work that the tenant never promised to undertake.
Court pleadings require a different discipline. Rule 149(1)(b) of the Uniform Civil Procedure Rules 1999 (Qld) requires material facts rather than the evidence proving them. A claim should identify the promise, breach and basis for relief. Stonegate Legal’s guide to pleadings and particulars in Queensland explains that distinction.
If litigation follows, relevant documents must also be considered under the applicable disclosure rules. Rule 211 addresses documents in a party’s possession or control directly relevant to an allegation in issue, subject to the rules’ qualifications. Stonegate Legal’s guide to disclosure of evidence in Queensland explains the process. Preserve documents that undermine the claim as well as those that support it.
Resolving disputes about make good clauses
The Queensland Small Business Commissioner’s make good guidance identifies QSBC mediation for make good disputes up to $750,000. Eligibility and the process should be checked for the particular tenancy. Mediation provides a way to negotiate scope, payment and security release; the mediator does not impose a judgment.
For retail shop lease disputes, QCAT’s current guidance describes the usual QSBC mediation pathway and its $750,000 monetary limit. Urgent interim relief is a separate consideration. Non-retail commercial lease disputes generally belong in the appropriate court; a modest claim does not itself confer retail leasing jurisdiction on QCAT.
Before settling make good clauses disputes, compare the supported claim with the expense of proving it. A settlement can allocate particular works, agree a payment for the remainder and fix the date for returning security. Attach the final scope and specify the claims released. The practical value of the agreement depends on whether it ends the dispute rather than leaving the next disagreement to be worked out after handover.
