1. Application for security for costs is dismissed.

2. The costs of this application are costs in the proceeding.

3. On or before 15 May 2002 each party must file and serve a list of all relevant documents in its possession or power and make those documents available for inspection by the other parties on or before 22 May 2002.

For the Applicant: Mr J. Bloch of Counsel, instructed by Burke and Associates

For the First Respondent: Mr Redfern, Solicitor, instructed by Talbot and Burton

1. This proceeding concerns the exercise, or as the landlord would have it, the non-exercise of an option to renew a retail premises lease by Sarandis (Vic) Pty Ltd, the tenant of the relevant premises.

2. I will not at this stage trace the procedural history of the matter so far. It is sufficient to note that today I have before me an application by the first respondent, being the present landlord of the premises, Mulberry's Australia Pty Ltd for security for costs against the applicant company, Sarandis (Vic) Pty Ltd.

3. The application is brought under Section 79 of the Victorian Civil and Administrative Tribunal Act 1998 which authorises the Tribunal, on the application of a party to a proceeding, to order at any time, that another party gives security for the applying party's costs within the time specified. Failure to grant that security as ordered may lead to the proceedings being dismissed or stayed as against the defaulting party. The power to make these orders is given to the presiding member or a presidential member. I seem to qualify on either of those bases.

4. What then is the correct approach to adopt in the circumstances? Section 79 itself provides no guidance as to how the discretion is to be exercised. I was referred to Section 1335 of the Corporations Act 2001. That provision states that:

"(1) Where a corporation is plaintiff in any action or other legal proceeding the court having jurisdiction in the matter may if it appears by credible testimony that there is reason to believe that the corporation will be unable to pay the costs of the defendant if successful in his her or its defence require sufficient security to be given for those costs and stay all proceedings until the security is given.

(2) The costs of any proceeding before a court under this Act is to be bound by such party to the proceeding as the court in its discretion directs."

5. Under the present constitutional arrangements I am far from clear whether whatever the meaning of the reference to "the Court" or "a court" without capitalisation might be according to the dictionary in the Act, jurisdiction under the section is bestowed on this Tribunal, a non-court. Be that as it may I believe that Section 1335 provides a valuable context in which to consider the exercise of jurisdiction undoubtedly given to me under Section 79 of the Victorian Civil and Administrative Tribunal Act.

6. Turning then to the requirements of sub-section (1). Has it been shown by credible testimony that there is reason to believe that Sarandis (Vic) Pty Ltd will be unable to pay the costs of Mulberry's Australia Pty Ltd if Mulberry's is successful in its defence? In my view it has been so demonstrated. The affidavit of Mr Macmillan, solicitor for Mulberry's shows that Sarandis (Vic) Pty Ltd has a paid up capital of $100. He deposes to the conduct of an index search under the terms of the Transfer of Land Act and the failure to find any fee simple in land in Victoria owned by Sarandis.

7. Mr Bloch, Counsel for Sarandis says that these enquiries do not necessary demonstrate the net wealth of an individual or a corporation. So much may be accepted but they are suggestive of a distinct lack of resources. Moreover, the applicant, respondent to today's application, has filed no evidence which would seem to give the lie to the inferences that Mr Macmillan, the solicitor for Mulberry's has drawn. Indeed, the applicant respondent today has filed no evidence at all on any such issue. Accordingly in my view it is established that there is reason to believe that Sarandis would not be able to pay the costs awarded to Mulberry's if such costs award were made.

8. As against this, Mr Bloch, Counsel for Sarandis submits that Section 109 of the Victorian Civil and Administrative Tribunal Act sub-section (1) creates a presumption that costs in the Tribunal should generally lie where they fall. In those circumstances he says that the making of a security for costs order in the Tribunal would be a most unusual thing and certainly one which is not justified in the present circumstances. Both Counsel before me agreed that the bona fides and prospects of success of the present proceeding were relevant matters to be considered.

9. Mr Redfern who appears for Mulberry's says that in so far as the claim against his client is based upon an alleged or perhaps actual failure to comply with the requirements of Section 18(2) of the Retail Tenancies Reform Act 1998 establishment of that contention as correct would not entitle the applicant to the relief which it seeks. Sub-section (2) provides that a retail premises lease containing an option must state

(b) the manner in which the option is to be exercised;

(c) the terms and conditions upon which the lease is renewable; and

(d) the manner in which the rent payable during the term for which the lease is renewed is to be determined.

10. The contention here is that the time frame for the exercise of the option viz. the date until which the option is exercisable, is not distinctly stated. Clause 3(f) is the clause in the standard form lease which creates an option in favour of the tenant in fairly conventional terms. It provides for the option to be exercised not more than six and not less than three months before the expiration of the term and then refers a reader to an item in the schedule. The item in the schedule does not contain a particular date, it appears to be an incomplete notice of the form required by Section 18(3) which requires the landlord to "notify the tenant in writing of the date after which the option is no longer exercisable at least three months before that date". In those circumstances the tenant's contention is that Section 18(2) has been breached and the tenant remains at liberty to exercise the option at any time until the expiry of the relevant lease. This, the tenant, Sarandis, contends it has done.

11. Mr Redfern's submission is that since there is no civil penalty or consequence stated for the breach of Section 18(2) there is simply no basis upon which it could be contended that the lease is extended in the manner which Mr Bloch, Counsel for the tenant suggests it is. Mr Redfern notes that the Retail Tenancies Reform Act elsewhere indicates in the clearest terms, the civil consequences of contraventions. The absence of such a statement here indicates a lack of civil consequence, except perhaps the ability to bring a claim for damages for breach of statutory duty. In that regard he referred me to a decision of Marks J in the matter of Dovastand Pty Ltd v Mardasa Nominees [1991] VicRp 68; [1991] 2 VR 285 where His Honour considered the consequences of contravention of a somewhat different provision of the Retail Tenancies Act 1986, namely Section 15 which failed to state distinct consequence civilly for contravention.

12. There is also a contention in the points of claim of the applicant, based upon misrepresentation or estoppel. As to that Mr Redfern contends that the misrepresentation was made before his client became entitled to the reversion. In those circumstances he submits that his client would not be responsible for this alleged misrepresentation. He referred me to an article by a member of the Queensland Bar, entitled "Misrepresentation in Assignment of Leasehold Interests", the author is Darlene Skennar and the article appears at page 111 of the Queensland Law Society Journal for April 1992.

13. In Mr Redfern's submission the case against his client is weak and that is another reason why the security for costs order which he seeks should be made. He relies upon an affidavit from Mr Macmillan who has the conduct of the proceeding on behalf of the first respondent where Mr Macmillan assesses the total costs of the proceeding to his client at $26,000 of which $4,000 has already been incurred, further costs will be entailed in first taking the matter to mediation and secondly bringing it on to hearing.

14. What then is one to make of all these contending issues? First, there is nothing in Section 79 of the Victorian Civil and Administrative Tribunal Act 1998 that would confine the making of an award for security for costs to proceedings which are frivolous, vexatious, lacking in substance or otherwise an abuse of the Tribunal's process. Indeed, Section 75 of the Act provides its own remedy for such proceedings and that remedy is strike out or dismissal. Accordingly Section 79 must be intended to operate, perhaps in those circumstances, but also in circumstances where the claim made by the respondent to the security of costs application is not so obviously weak or flawed as to be susceptible to a summary dismissal. Moreover, the presence of Section 79 in the statute indicates that one cannot reason from the presumption against the award of costs at all to be found in Section 109(1) that it would never be appropriate to award security for costs in the Tribunal and the practice in this List has been to regard disputes between landlord and tenant as to retail tenancies, as having the character of commercial litigation. So despite the presumption to be found in Section 109(1) characteristically the victor in a proceeding in this List secures its costs.

15. All of this leads one to a point of substantial uncertainty. I have satisfied myself I have the jurisdiction to make the award of costs. A prima facie indicator that security for costs should be awarded has been established, namely the existence of credible testimony that there is reason to believe that a corporate applicant will be unable to pay the costs of the respondent if the respondent is successful. The claim made may be open to doubt, certainly not so weak as to be susceptible of a summary dismissal. No such application has been made; but that in itself is insufficient to exclude the possibility that security for costs would be appropriate.

16. What then is the indicator that would point me in the one direction or the other? I accept what Mr Bloch submits that the Tribunal should be slow to make security for costs orders because the attedancy that this would have to stifle the bringing of proceedings. Secondly, I should note that even although the practice in this List as to the award of costs following the event, has been relatively unwavering, that practice has not escaped criticism from the wider community. One of the matters being discussed by a Ministerial working group to consider the reform of the law in this area would be the establishment of a rule that costs should be awarded in proceedings such as this only where it is found that the one party or the other has acted frivolously or vexatiously.

17. The result that I come to therefore is that whilst I accept that this might be a case appropriate for the award of security for costs, the context of which this Tribunal operates means that it is only in relatively clear cases that such orders should be made. By clear cases I do not mean cases where the applicant's claim could be summarily dismissed. That would be an unreasonable and inappropriate restriction to put on the power for reasons already given but in circumstances where I feel frankly perplexed as to whether I should or should not order the award of security for costs. My perplexity I think should be answered by resolving the question in the negative. As to that I think that my relatively cautious approach should be regarded as in conformity with the approach adopted by Deputy President Cremean in perhaps in the circumstances in Red Earth Building Maintenance Service Pty Ltd v Dura Australia Constructions Pty Ltd. Accordingly I do not make an award for security for costs.