2.2 'In consideration of the parties entering into the Variation of Lease the tenant releases and forever discharges the landlords from the proceedings and all claims which the tenant has or has had against the landlord in respect of or arising out of either directly or indirectly the proceedings.'

2.3 'The tenant hereby indemnifies and shall keep the landlord harmless from all further action, suits, causes or action proceedings, accounts, costs, liability and damage relating to the same subject matter as the proceeding.'

1. Subsequent to that agreement being entered into and the Variation of Lease, proceedings were commenced last year (in about July) whereby the tenant sought the removal inter alia of a fence and by way of counterclaim the landlord sought damages which were the amount of costs that the landlord spent on defending this proceeding or certain matters, that were done in contemplation of the proceeding.
2. On 4 December 2013 I handed down a decision in this matter where I dismissed the applicant's application and the application for indemnity costs made by the respondent by way of counter claim was reserved and costs were reserved generally. At paragraph [70] of my Reasons for Decision I stated as follows:

'I agree with the submissions made by Mr Stark that the issues in this proceeding are substantially the same as those in the previous proceeding. Therefore, as a result of the terms of settlement, it was not competent for the applicant to bring this proceeding. In any event, the construction of the fence complained of is covered by the Deed of Settlement and the Deed of Variation of Lease.'

1. Subsequent to handing down that decision the respondents have now made an application to this Tribunal. The first part of the application is pursuant to the counter claim whereby the respondents say that it should be entitled to damages as a result the tenant making this application and those damages are the amount of indemnity costs that they have actually paid and will pay as a result of this proceeding. The landlord also says that if it fails in relation to the first part of the application then it is entitled to indemnity costs in conducting this proceeding. The provision for costs in these matters is set out in paragraph [109] of the Victorian Civil and Administrative Tribunal Act 1998. However, section [92] of the Retail Leases Act 2003 (the Act) has been overlaid upon that section and it provides that the Tribunal may make an award of costs but only in certain circumstances:

'Subject to this Division, each party is to bear their own costs in the proceeding.'

'At any time, the Tribunal may order that a party pay all or a specified part of the costs of another party in a proceeding.'

'The Tribunal may make an order under subsection (2) only if satisfied that it is fair to do so, having regard to -

(a) whether a party has conducted the proceeding in a way that unnecessarily disadvantaged another party to the proceeding by conduct such as -...

1. It is said by Mr Morris, who appeared on behalf of the landlord that that is exactly what the tenant has done in this proceeding. That is, unnecessarily disadvantaged the landlord by conducting the proceeding vexatiously.
2. Before turning to the matter of costs in section 92of the Act I will deal with the application as to damages which is in fact the counter claim. I have already referred to clauses 2.2 and 2.3 of the Settlement Agreement. I have referred to my specific finding that the issue in this proceeding was covered by that Settlement Agreement. Mr Gillies on behalf of the applicant has referred the Tribunal to section 94 of the Retail Leases Act which forbids any contracting out of the provisions of the Retail Leases Act. That reads as follows:

'A provision of the Retail Leases Act or an agreement whether or not the agreement is between the parties to a Retail Lease is void to the extent where it is contrary to or inconsistent with anything in this Act...'

1. In this particular instance the tenant did more than just initiate proceedings (which may be vexatious) it conducted them in a full two day hearing before me. The matters that form part of this proceeding were already dealt with in the Deed of Settlement and in the Variation of Lease.
2. In my view what the tenant did here was to force the landlord to re-litigate a matter that had already been resolved between them. The landlord was entitled to do exactly what was complained of - that is, to build a fence.
3. There was a counter claim in this matter which was not withdrawn. Mr Gillies stated it was therefore necessary to run this proceeding. I do not agree with this submission. This proceeding was clearly building up damages in the counter claim. It would have been a relatively simple matter if the tenant had seen the error of its ways, or sought to ask for the counter claim to be withdrawn; but it did none of those things.

1. After having reached a settlement, a party should not have to argue its case over and over again to defend its position.
2. I refer to the decision of Judge Bowman in State of Victoria v Brett Hooper Pty Ltd (2006) VCAT 1813 - His Honour there dealt with the meaning of the word "vexatious" in relation to s.92 at paragraph [66] His Honour stated:

'In essence, there was not a great deal of conflict between the parties as to the principles to be applied in relation to the operation of s.92 of the Retail Leases Act. Clearly that section is designed to restrict the number of situations in which costs can be ordered.

1. I agree that, whilst assistance can be gained from looking at various sections of the Victorian Civil and Administrative Tribunal Act, the manner in which they have been interpreted, s.92 should essentially be viewed in isolation. While it may well be that both under the Retail Leases Act and the Victorian Civil and Administrative Tribunal Act the starting point is that no order for costs should be made and that each party should bear their own costs the exceptions contained in s.[109](3) of the Victorian Civil and Administrative Tribunal Act with the exception of (3)(a)(iv) do not operate. If I am to order costs in a matter brought pursuant under the Retail Leases Act I must be satisfied that it is fair to do so because the party conducted the proceedings in a vexatious way that such conduct necessarily disadvantaged the other party to the proceedings.
2. I am also of the view that, pursuant to the frequently cited test in Oceanic Sunline, a proceeding is conducted in a vexatious manner if it is conducted in a way of serious and unjustifiable trouble and harassment or if there is conduct which seriously unfairly prejudicial or damaging.
3. In this particular instance, in my view conducting this proceeding in such a way as the tenant did is quite unjustified and has caused the landlord a considerable amount of trouble. It should have been obvious to the tenant that the subject of this proceeding was something that was clearly already agreed between the parties pursuant to the Deed of Settlement and the Deed of Lease.
4. Given those circumstances, I find that the proceedings were conducted vexatiously. I also find that the proceedings were conducted causing the landlords disadvantage. It was compelled to come to the Tribunal and defend this proceeding and it was also compelled to employ expensive Counsel and solicitors in order to do so. This has cost them a considerable sum of money.
5. Therefore I will award the costs of the proceeding.

1. The next matter is whether indemnity costs should be awarded. Indemnity costs are rarely awarded in a court and they should be even rarer in this Tribunal where there is an assumption that each party should bear their own costs (s.109). I take into account that the proceedings were heavily contested.
2. Before indemnity costs can be awarded in this Tribunal it needs, in my view, to be shown that something extraordinary about the way that the parties that should bear the costs have conducted themselves. In this case, the party has issued the proceeding and conducted the proceedings when it should not have. However, in the light of how it has conducted itself, no criticism has otherwise been made.
3. In those circumstances, in my view, it is not appropriate to order indemnity costs.

1. Thus the order I will make will be that the respondent's costs of this proceeding be paid by the applicant and in default of agreement be taxed on the County Court Sale and that the counter claim will be dismissed.
2. Mr Gillies for the applicant has made an application for costs on the counter claim which I have ordered should be dismissed. Mr Gillies submitted that the reasons in the counter claim were not well founded and that they were an obstacle to settlement. I find it hard to accept that the counter claim was an obstacle to settlement. There is no correspondence from the applicant to the respondent to say that the applicant would withdraw the proceeding if the counter claim were withdrawn.
3. Mr Gillies is asking for costs of the counter claim. S.94 would suggest it should not have been issued. Under those circumstances I will not order costs on a counter claim.