A popular Italian restaurant on Scarborough Beach’s bustling foreshore claims its lease has been unfairly terminated by the local council as a result of a “minor water issue” it believes has already been resolved.

La Capannina opened in 2018 as an integral part of the coastal strip’s dramatic refresh, serving Mediterranean favourites with a sweeping view of one Perth’s most picturesque northern beaches.

However, on Monday owner Karri Li discovered she had been locked out of the restaurant after the council changed the locks over the long weekend.

In a social media post on Tuesday, La Capannina said it had been served an “unfair lease termination” by the City of Stirling over a water leak that was affecting neighbouring businesses.

“Recently, a minor water issue was identified at the premises and classified as medium risk. The leak was affecting our neighbours downstairs, Zoie Cafe & Scarborough Beach Pool,” the post said.

“The business acted immediately and responsibly: Qualified contractors were engaged, the source of the issue was identified by demolishing some areas of the restaurant, the leak was rectified, affected areas were opened and prepared for inspection for the council.”

Ms Li claims she was not afforded a final inspection of the rectification works she’d carried out and she was served a termination notice on Friday with less than one business days’ notice.

“This occurred over a public holiday period, making response effectively impossible,” she added.

City of Stirling claims the restaurant was made aware of a related issue more than a year ago in December 2024 and had not appropriately addressed it after several tests and notices.

The council believes the water penetration issue now represents a “significant structural risk” to the neighbouring businesses in the precinct.

“Since December 2024, the City has endeavoured to work with the tenant operating La Capannina to address the issue of water penetrating the concrete slab at the premises, which is situated on the upper floor of the Stirling Leisure – Scarborough Beach Pool facility,” City of Stirling Mayor Mark Irwin said in a statement.

“We have conducted tests and inspections in that period and issued multiple notices, from Improvement Notices in February and October 2025 to a Breach Notice in March 2026. Unfortunately, the tenant has repeatedly failed to comply with the notices, leaving the City with little choice but to terminate the lease.

“We are passionate about supporting small businesses and local jobs, and terminating a lease is a last resort, but the water penetration issue now represents a significant structural risk.

“We plan to start the works required to rectify the issue as soon as possible.”

However, Ms Li rejected the council’s timeline, telling PerthNow she first received a verbal note from the council in December 2025 that there was leaking downstairs.

She said that she immediately adjusted the way the restaurant cleans as the issue was not visible to her, and that she continues to maintain a great relationship with the owner.

Ms Li said on March 11 she then received a Notice of Default from the council stipulating the need to rip up parts of the floor to identify and remedy the source of the leak.

The owner believed she acted quickly, engaging a contractor on March 18 to assist with the repairs, who then submitted a remediation plan to the council on March 29 before commencing work on March 31.

Ms Li said the council came to inspect the progress twice in early-mid April, with works continuing up to April 20.

By then, Ms Li said the source of the water ingress had been identified, with the leakage ceased immediately.

On April 21, Ms Li invited the council to return to complete a final inspection but she didn’t initially hear back.

Then, on Friday last week, three days later, she received a phone call from the council advising her La Capannina’s lease would be terminated as the kitchen was not demolished.

She was then issued a physical termination notice at the restaurant at 3.30pm on the same day which said the lease would be up by midnight of Monday evening, April 27.

Ms Li felt the timing of the letter barely allowed her an opportunity to engage her lawyers ahead of the Anzac Day long weekend, and had she not acted swiftly, would have forfeited her opportunity to appeal the decision.

She said her lawyers have given the City until 4pm on Wednesday to respond.

Ms Li is asking the community to rally around the venue, and has launched a petition to suspend the notice and be given another opportunity for an inspection to take place.

By midday Wednesday, it had garnered more than 1100 signatures.

Ms Li said she continues to pay her beloved staff, up to 40 in the off-season, in the hope they’ll continue to work for her should the termination be reversed.

“I don’t know what’s going to happen next, I’m very very concerned,” Ms Li admitted.

“Not just for my family, but also for my staff. My restaurant is like a family-run business.”