For the Applicants: Mr G. Baker of Counsel, instructed by Nathan Legal Practitioners

For the Respondents: Ms S. George, Solicitor of Oakley Thompson & Co

1. This proceeding concerns two shops at Hampton Park. The applicant tenants were the tenants of Shop 6, 65 Hallam Road, Hampton Park. Disputes arose between them and their landlord Gold Sea Pty Ltd with respect to the tenancy. The matter was referred to mediation and the parties signed Terms of Settlement on the 6th of December 2002. Those terms provided first, for the tenants to vacate Shop 2 by the 31st of January 2002, secondly, that there were exonerated from paying rent for December 2002 and January 2003. Thirdly, "Tenant to be granted lease of Shop 2 from 1.2.2003 for five years plus two options to renew each of five years on landlord's current lease terms." Four, "commencing rent for a new lease from 1.2.2003 to be at same rent presently paid by Shop 2". There then follow a series of further terms which it is unnecessary to repeat in their totality, except term Seven which says, "Tenant's VCAT application to be discontinued."

2. The present application is one for reinstatement and for the dispute between the parties as initially ventilated in effect to be revisited.

3. The matter came on for hearing before Mr Young last week and he directed that the proceeding be reinstated and that the parties file affidavit material setting out their positions. Had order been made by the Tribunal according to the terms of settlement that the proceeding be discontinued, or rather to use the language of the Victorian Civil and Administrative Tribunal Act 1998, the proceeding be withdrawn, the Tribunal would be functus officio and it would have been impossible to reinstate the proceeding. As it is, the order which I made consequent upon the settlement was that the proceeding was struck out; hence, the Tribunal is not functus officio and Mr Young had jurisdiction to make the order of reinstatement that he did make. He directed the filing of affidavits so that the issues between the parties could be established.

4. Apparently what has occurred is that a lease for the new shop, namely Shop 2, was submitted to solicitors then acting for the tenants. That lease it is accepted now was in defective form in that it did not follow the provisions as to rental review which were set out in the lease held by the then tenant of Shop 2. This is as required by paragraph No. 3 of the Terms of Settlement.

5. Mr Baker who appears on behalf of the applicant tenants submits in the circumstances that the submission of this incorrect lease which according to the affidavit of Ms George, a solicitor from the firm acting for the respondent, was not corrected until the 29th of January 2003, constituted a repudiation of the terms of settlement which his clients have accepted. That being the case they now seek to be remitted to the position they were in immediately prior to having entered into the terms of settlement.

6. Mr Baker says it is an implied term of the terms of settlement that time is of the essence and so the delay in submitting the correct lease in itself constitutes a breach of the lease.

7. Ms George has drawn my attention to a number of matters in her own affidavit. She says that the managing agent, Norwood Property Services Pty Ltd received a letter from a Mr Visa Nathan, a solicitor who had commenced acting for the applicants advising that the lease which had been submitted to them for Shop 2 was incorrect. She exhibits that letter as SKG5. According to Paragraph 16 of her affidavit she said she became aware of that letter on the 10th of January 2003 and

"On that day I contacted Mr Visa Nathan to confirm that he was acting for the applicants and to request that he provide a copy of the document he claimed contained the correct terms of the old Shop 2 lease."

The following paragraph says by letter dated 10 January "received in our office on 13 January 2003 Mr Nathan provided a copy of that lease" which she exhibits. It continues:

"I advised Mr Visa Nathan that if the first draft lease was incorrect it would be amended in accordance with the Further Lease"

8. In my view the submission of a defective draft document in itself cannot amount to a repudiation. Clearly if an error appears in a draft and the author of the draft acting for a party declines to bring the draft into conformity with the contractual obligations of the parties, such action would constitute a refusal to perform obligations in accordance with their tenor. The account given by Ms George however is not of this at all. If I accept what she says occurred and I did not understand it to be contradicted, once the error was pointed out she expressed a willingness to correct it and indeed it has been corrected. Accordingly I reject the submission that there has been a repudiation of the terms of settlement.

9. As to the issue of whether time is of the essence of the terms or not, first I note that there is no express term in the terms of settlement to that effect and secondly, that the general rule in commercial matters is that time is not of the essence. Accordingly, if it be significant whether time is of the essence of these terms or not, I am inclined to the view that it is not. In those circumstances it seems to me that the claim to undo the terms of settlement and to remit the tenants to their position immediately prior to the terms of settlement is lacking in legal merit and that this proceeding although now reinstated should once again be terminated. In my view, in the circumstances, the proper mode of termination should be that the proceeding be dismissed to render the Tribunal functus officio however, before I take the step of pronouncing such an order I would invite Mr Baker to make any submissions that he may care to make in that regard.

10. In that event, I will order that the proceeding be dismissed.

11. I have given my reasons for dismissing this proceeding which was reinstated last week upon application of the applicant tenant by order of Mr Young. I did so on the basis that the arguments in support of the tenants attempt to release themselves from the terms of settlement which have been agreed to were lacking in legal merit. In those circumstances Ms George who appears for the respondent landlord seeks an order that the costs of this directions hearing and of the previous one before Mr Young should be ordered to be paid by the applicant tenants. Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 posits a general position that costs lie where they fall. In the Retail Tenancies List our tendency has been to regard the proceedings as in the nature of commercial litigation between commercial parties and one of the grounds which entitles the Tribunal to depart from the prima facie situation of no orders as to costs is a consideration of the nature and complexity of the proceedings.

12. That approach would lead to a view that since the respondent had been the victor today it should have its spoils by way of costs. In addition, Section 109 also renders it appropriate to consider the relative strengths of the claims made by the parties. I have indicated that I find the applicant's contentions lacking in legal merit. So for those two reasons I propose ordering that the applicants pay the respondent's costs to be taxed in default of agreement in accordance with County Court Scale "B".