1. Under cover of correspondence dated 9 January 2024, the Landlord's managing agents forwarded to the Tenant copies of all outstanding invoices in respect of rent and outgoings and other charges or costs said to have accrued under the lease between the parties.
2. Given that the Tenant had advised that it would vacate the Premises, I made further orders dated 9 January 2024 listing the proceeding for administrative mention on 25 January 2024, by which date the parties were to advise the Tribunal whether there were any outstanding matters to be determined by the Tribunal.
3. In response to the administrative mention, the Landlord requested a further directions hearing. To that end, the proceeding was listed for a directions hearing on 29 February 2024. The Tenant did not appear at the directions hearing. The orders made on that day included timetabling orders for the filing of material in support of and in opposition to the Landlord's application for costs; and general orders to progress the proceeding, which included:
   1. By 28 March 2024, the applicant must file and serve Points of Claim which must include fully itemised particulars of the claim including the loss and damage and/or other relief sought.
   2. If by 28 March 2024, the applicant does not file Points of Claim, the Tribunal will assume that the applicant does not wish to prosecute any further claim against the respondent and an order will be made without further notice pursuant to s 76 of the Act that the proceeding, insofar as it relates to any claim by the applicant against the respondent, be struck out.

1. By 26 April 2024, the respondent must file (with the applicable fee payable) and serve a counterclaim in the form of Points of Counterclaim which must include fully itemised particulars of the counterclaim including the loss and damage and/or other relief or remedy sought.
2. By 24 May 2024, the applicant and the respondent by counterclaim must file and serve Points of Defence to Counterclaim specifying material facts relied upon. Any set-off claimed must be fully set out.
3. The Landlord filed Points of Counterclaim dated 29 April 2024, wherein it claimed as against the Tenant and the Guarantor:

(a) $131,742.58 for reinstating the front garden and retaining wall;

(b) $70,005.05 for outstanding rent and outgoings;

(c) $26,048 for repairing damage to the flooring;

(d) damages or compensation for lost rent, reletting and marketing costs (unspecified);

(e) interest; and

(f) costs

1. The Tenant failed to file any Points of Claim. Consequently, a further directions hearing was listed for 5 June 2024. Neither the Tenant nor the Guarantor appeared. Consequently, I ordered:
   1. Pursuant to s 76 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('the Act'), the applicant's claim against the respondent is struck out for want of prosecution.
   2. For the avoidance of doubt, the proceeding now only comprises the respondent's counterclaim filed on 29 April 2024 as against the first and second respondents by counterclaim.
   3. The date by which the respondents by counterclaim must file and serve Points of Defence to Counterclaim is extended to 28 June 2024.
   4. If by 28 June 2024, the respondents by counterclaim, or either one of them, fail to file Points of Defence to Counterclaim, an order will be made without further notice pursuant to s 78 of the Act that the applicants [sic] counterclaim as against that respondent by counterclaim who has failed to file Points of Defence to Counterclaim will be determined in favour of the applicant by counterclaim, with the quantum of damages to be assessed and with costs to be determined.
2. Neither the Tenant nor the Guarantor filed any Points of Defence to Counterclaim. Consequently, by further order dated 4 July 2024, I ordered:
   1. Pursuant to s 78 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('the Act'), the counterclaim made by the applicant by counterclaim is determined in favour of the applicant by counterclaim with the quantum of damages to be assessed ('the Assessment of Damages Claim') and with costs to be determined ('the Costs Claim').
   2. By 26 July 2024, the applicant by counterclaim must file and serve any affidavit material or written submissions in support of the Assessment of Damages Claim and/or the Costs Claim.
   3. By 16 August 2024, the respondents by counterclaim (individually or collectively) must file and serve any affidavit material or written submissions in response to the Assessment of Damages Claim and or the Costs Claim.
   4. Pursuant to s 100 of the Act, the Assessment of Damages Claim and any Costs Claim will be heard and determined 'on the papers', subject to a party requesting an oral hearing to be convened in lieu thereof.
3. On 30 July 2024, the Landlord filed and served written submissions in support of its Assessment of Damages Claim and the Costs Claim, together with an affidavit of Andrew William Birbara, the solicitor with the care and conduct of the proceeding of behalf of the Landlord, also dated 30 July 2024.
4. No affidavit material or written submissions were filed on behalf of either the Tenant or the Guarantor.
5. On 14 October 2024, the Guarantor filed an application in his personal capacity and as the director of the Tenant, seeking an order extending the date for the filing of any responsive material to the Assessment of Damages Claim and the Costs Claim on the ground that he was unwell.
6. By further correspondence dated 28 August 2024 the Guarantor advised that he was obtaining medical documentation to substantiate the application for an extension of time based on medical grounds.
7. By orders dated 2 October 2024, I noted that no medical documentation had been filed by the Guarantor or the Tenant. Nevertheless, orders were made giving the Guarantor and the Tenant an extension of time in which to file any affidavit material or written submissions in response to the Assessment of Damages Claim and the Costs Claim until 15 November 2024.
8. On 25 October 2024, the Guarantor filed a document which purported to be a medical certificate or report in support of their request that the determination of the Assessment of Damages Claim and Costs Claim be adjourned to a future but unspecified date. The document purporting to be a medical certificate was heavily redacted, with the effect that it provided virtually no information as to the medical condition of the Guarantor or why he or the Tenant was unable to comply the Tribunal's orders.
9. By order dated 21 February 2025, I refused the Guarantor's application to adjourn the Tribunal's determination of the Assessment of Damages Claim and Costs Claim sine die. However, I granted a further extension of time by which the Tenant and the Guarantor file and serve any affidavit material or written submissions to 14 March 2025.
10. Neither the Tenant nor the Guarantor filed any affidavit material or written submissions by 14 March 2025. However, by email correspondence dated 6 March 2025, the Guarantor requested a further extension of time to file and serve that material.
11. Consequently, by further orders dated 13 March 2025, the Tenant and the Guarantor were given a further extension of time until 21 March 2025 to file any affidavit material or written submissions in response to the Assessment of Damages Claim and Costs Claim, with the Landlord being given liberty to file any responsive material by 28 March 2025.
12. As at the date hereof, no affidavit material or written submissions have been filed by either the Tenant or the Guarantor.

1. The lease between the parties is dated 20 January 2023 for a term of four years commencing on 1 February 2023 ('the Lease'). The rent payable under the lease was $100,000 per annum plus GST ($110,000), payable in advance by monthly instalments of $9,166.67 on the first day of each month. Item 10 of the Lease schedule states that all building outgoings are payable by the Tenant or required to be reimbursed by the Tenant.
2. The Lease also contains a guarantee and indemnity provided by the Guarantor, which states, in part:
   1. OBLIGATION OF GUARANTOR(s) UNDER GUARANTEE AND INDEMNITY

15.1 The guarantor in consideration of the landlord having entered into this lease at the guarantor's request -

15.1.1 guarantees that the tenant will perform all its obligations under this lease for the term and any further term and during any period of over holding after the end of the term.

15.1.2 must pay on demand any amount which the landlord is entitled to recover from the tenant under this lease whether in respect of the term, any further term or any period of over holding, and

15.1.3 indemnifies the landlord against all loss resulting from the landlord having entered into this lease whether from the tenant's failure to perform its obligations under it or from this lease being or becoming unenforceable against the tenant and whether in respect of the term, any further term or any period of over holding.

2.1 The tenant must -

2.1.1 pay the rent without any set-off (legal or equitable) or deduction whatever to the landlord on the days and in the way stated in Item 9 without the need for a formal demand.

...

2.1.3 pay when due all charges for the provision of services to the premises including gas, electricity, water, internet and telephone.

...

2.1.5 pay the proportion of the building outgoings specified in item 10 in accordance with clause 5.4

...

2.1.7 pay within 7 days of a request interest at the rate that is 2% more than the rate from time to time fixed by the Penalty Interest Rates Act 1983 (Vic) on any rent or other money which the tenant has not paid within 7 days of the due date. Interest is to be calculated daily from the due date, continues until the overdue monies are paid and is capitalised monthly.

2.1.8 pay within 7 days of a request the landlord's reasonable expenses and legal costs in respect of -

...

(c) the surrender or ending of this lease (other than by expiration of the term) requested by the tenant, whether or not the lease is surrendered or ended,

...

(f) any breach of this lease by the tenant, or

(g) the exercise or attempted exercise by the landlord of any right or remedy against the tenant,

but, if the Act applies, only to the extent to which the Act permits recovery.

1. In relation to the Tenant's obligation to make good, clauses 3.2 and 3.3 state, in part:

3.2 In addition to its obligations under clause 3.1, the tenant must -

...

3.2.15 maintain any grounds and gardens of the premises in good condition, tidy, free from weeds and well watered.

3.3 The tenant is not obliged -

...

3.3.2 to carry out structural capital repairs or alterations or make payments of a capital nature unless the need for them results from -

(a) negligence by the tenant or the tenant's agents,

(b) failure by the tenant to perform its obligations under this lease,

(c) the tenant's use of the premises, other than reasonable use for the permitted use; or ...

1. As indicated above, the Landlord's counterclaim against the Tenant, and by extension the Guarantor, comprises several elements. In the affidavit of Andrew William Birbara dated 31 July 2024, Mr Birbara sets out what the Landlord now counterclaims against the Tenant and Guarantor as follows:

Outstanding rent and outgoings (as at the date of surrender of lease)

Invoice no. 695569

Bundle exhibit pages 18 to 19

Loss of rent since tenant abandonment on 16 January 2024

Reinstatement quotes contained in pages 115 to 134 of the bundle exhibit to the affidavit of Michael Kiriakidis sworn 03/11/2023

3.1.1

3.2.2

3.2.12

3.2.15

AP 17.2(A)

Assessment Report from Steam Attic Total Cleaning and Restoration which quotes $26,048 (GST) to repair the damage. Bundle exhibit pages 32 to 43.

Invoice, DM Lawrance 05/04/2024

Bundle exhibit page 44

Remedial action for attendance non-compliant electrical work

Quote, Pro-Cut, 02 May 2024

Bundle exhibit page 50

3.1.1

3.2.2

3.2.12

3.2.15

AP 17.2 (A)

Invoice, TreeSpace, 16 Apr 2024

Bundle exhibit page 50

3.1.1

3.2.2

3.2.12

3.2.15

AP 17.2 (A)

1. The total amount claimed according to the table set out above is $564,389.22. This amount is substantially higher than what has been quantified in the Landlord's Points of Counterclaim, although that document does not quantify Item 2 in the above table, which represents the largest component of the Landlord's counterclaim.

Cost of reinstating the Premises ($148,869.58)

1. In relation to the cost of reinstating the Premises, I repeat my findings and comments made in my earlier determination and reasons dated 6 June 2023, where I observed that the garden areas which formed part of the Premises had been significantly destroyed by the Tenant, with the obvious intention of eventually re-landscaping those areas to enhance the outdoor settings of the function and reception centre to be conducted from the Premises. In my Reasons, I stated:
   1. In my view, the mere fact that the Tenant has only been in occupation since February 2023 does not tip the balance of convenience in favour of the Landlord. Further, I am not persuaded that by allowing the Tenant to regain occupation would result in no work being done to the garden areas or other parts of the Premises. As indicated above, there is email correspondence passing between the parties indicating what the Tenant plans to do in terms of landscaping and other work. Moreover, I find it unlikely that the Tenant would leave the garden areas in their current state, given the nature of the business to be conducted from the Premises. In other words, it is unlikely, if not inconceivable, that the Tenant would attempt to operate a function reception business without the benefit of a garden setting and in circumstances where the garden areas resembled a construction site.[2]

1. Despite an intention to re-landscape the garden areas, disputation between the parties intervened, with the result that the garden areas were left in an unfinished state. Having regard to my earlier findings and observations, coupled with the numerous photographs exhibited to the affidavit of Michael Kiriakidis dated 2 November 2023, I find that significant hard and soft landscaping is required to the garden areas of the Premises to reinstate those areas to a condition substantially commensurate with the condition of the Premises prior to the commencement of the Lease. Specifically, those areas comprise the front garden, which has been significantly uplifted and will require reinstatement, the sleeper retaining wall that was partially demolished will also need to be reinstated and the rock retaining wall along the footpath, that was also partially dismantled, will need to be reinstated.
2. I find that the failure to reinstate the garden areas, retaining wall and rockwall to a condition that is reasonably commensurate with their condition at the commencement of the Lease constitutes a breach of clauses 3.2.15 and 3.3.2 (to the extent that clause 3.3.2 imposes a positive obligation on the Tenant to make good) of the Lease. I find that the damaged condition of the garden areas, retaining wall and rockwall, as at the date when the Tenant vacated the Premises, results from the acts and/or omissions of the Tenant and by extension, its failure to comply with the terms of the Lease.
3. The only evidence before me as to the cost of undertaking reinstatement works are the quotations exhibited to the affidavit of Michael Kiriakidis dated 2 November 2023 and to the affidavit of Andrew William Birbara dated 30 July 2024. Specifically, the quotation from Evangelisti Landscaping dated 2 May 2023 in the amount of $43,000 to reinstate the front garden,[3] the quotation from Lissan Landscaping and Fencing dated 22 June 2023 in the amount of $70,788.01 to rebuild the sleeper retaining wall,[4] the further quotation from Lissan Landscaping and Fencing also dated 22 June 2023 in the amount of $17,954.57 which is said to relate to the cost of obtaining engineering and architectural drawings, permits, et cetera,[5] and part of the quotation from Landcraft Pty Ltd dated 29 June 2023 in the amount of $17,127 to rebuild the rock retaining wall along the footpath.[6]
4. Doing the best that I can with the evidence before me and noting that that evidence is not contested, I find that the cost of reinstating the Premises is $148,869.58.
5. In so finding, I have also considered that reinstating the Premises could, conceivably, result in some element of betterment. However, I note that the quotations relied upon are now more than two years old and it is reasonable to assume that the cost of that work, if re-priced today, could be significantly higher. In my view, that factor offsets any element of betterment (if any).

1. The evidence relating to damaged flooring or subfloor is found in the affidavit of Andrew Birbara dated 30 July 2024, where Mr Birbara deposes to the following:
   1. On or about 16 January 2024, the landlord discovered that the tenant deliberately left water running in the premises which has caused damage to the flooring (see paragraph 35 of the counterclaim).

PARTICULARS

The tenant refers to the assessment report from Steamatic Total Cleaning and Restoration (which is referred to in the table at paragraph 31), which quotes $26,048 (incl GST) to repair the damage.

1. Due to the significant damage to the premises caused by the tenant, the landlord has been unable to re-let the premises while repair works being undertaken.
2. The Assessment report prepared by Steamatic is dated 19 February 2024. It states, in part:

Thank you for consulting with Steamatic to assist you. A Steamatic representative attended 219 Clark Street, North could 3070 on 16 February 2024 to undertake an inspection in relation to a water damage event.

Affected areas include: Crawl Space

Moisture readings were performed and readings were found to be elevated in comparison to unaffected areas.

Point of ingress is believed to be intentional wetting of the crawlspace area by previous tenant.

Steamatic also noted the presence of efflorescence along sections of brick & soil as a result of the wetting event. Steamatic would like to propose the following:

• - Mechanical Structural Drying
• - Anti-microbial Sanitation

Please note, structural drying is estimated to take 2 to 4 weeks.

1. The amount quoted to undertake the mechanical structural drying and anti-microbial sanitation is $26,048. Photographs were attached to that report which appear to depict the moisture affected areas.
2. There is no evidence before me contradicting the hearsay evidence of Andrew Birbara or the observations stated in the report prepared by Steamatic. Moreover, the allegation that the Tenant deliberately left water running in the Premises causing damage was raised in the Landlord's Points of Counterclaim and the Tenant was given the opportunity to file a defence disputing that allegation. That was not done.
3. Therefore, despite the limited evidence before me, I find the allegation proven and, in the absence of any contradicting expert report, the cost to make good that damage reasonable. In other words, I find the claim for $26,048 proven.

1. The Landlord claims $1,890 for the cost of obtaining a geotechnical report. An invoice from DM Lawrance Soil Testing Pty Ltd dated 5 April 2024 was exhibited to the affidavit of Andrew Birbara dated 30 July 2024. There are no details as to what that geotechnical report relates to, save for the comment "geotechnical review of subfloor and structures".
2. Similarly, there is no mention of that geotechnical report in the Points of Counterclaim. Although one may speculate that the expert report was obtained because of the water damage, there is no evidence that that is the case. Consequently, I find this aspect of the Landlord's claim unproven.

1. The Landlord claims $4,436.85 for electrical work, which according to the affidavit of Andrew Birbara dated 30 July 2024 represents "remedial action for tenant's non-compliant electrical work". That, together with a quotation from Kevlec Electrical dated 19 June 2024, is the only evidence to substantiate that claim.
2. However, the invoice from Kevlec Electrical provides little information as to what work was carried out. In terms of the materials which were supplied, the invoice states:

Cable/downlights/switches/power/delight/brackets/(7) LED Batten lights/fixings

1. Critically, there is no mention of electrical damage caused by the Tenant in the Points of Counterclaim. In my view, there is insufficient evidence to prove on the balance of probabilities that the Tenant caused damage to the Premises - notwithstanding the oblique reference in the affidavit of Andrew Birbara. Indeed, it is equally feasible that the work carried out by the electrician simply refers to upgrading works, as the invoice makes no mention of repairing non-compliant work.
2. I find this aspect of the Landlord's claim unproven.

1. The Landlord claims $8,470 for removal of five poisoned trees and $561 for an arborist's report.
2. There is no mention of this claim in the Landlord's Points of Counterclaim. The only evidence is a short statement in the affidavit of Andrew Birbara: "Removal of five poisoned five trees" and a quotation from Pro-Cut Tree Services Pty Ltd dated 2 May 2024, together with a report from Treespace Solutions dated 23 April 2024.
3. There is no evidence that the Tenant poisoned trees. The quotation from Pro-Cut Tree Services Pty Ltd makes no mention of the trees having been poisoned. Similarly, the arborist report from Treespace Solutions says nothing of trees being poisoned.
4. Therefore, I find this aspect of the Landlord's claim unproven.

1. Mr Birbara exhibited several invoices from the leasing agent as evidence of the arrears of rent, outgoings and other costs said to be due under the Lease. The first invoice is dated 14 October 2023 and spans the period 1 September 2023 to 30 November 2023. It claims $40,263.24. The second invoice is dated 8 January 2024 and adds new charges of $29,741.81 which cover the period 1 December 2023 until 31 March 2024. The aggregate sum claimed and consolidated in the second invoice dated 8 January 2024 is $70,005.05. That is the amount said to be due and payable under the lease in respect of arrears of rent, outgoings and other contractual charges.
2. Again, there is no evidence contradicting the amount claimed in respect of arrears of rent, outgoings and other contractual charges.
3. The contractual charges comprise what is described as an "occupation fee" of $9,166.67 per month. This is commensurate with the amount that would have been charged for rent, had the Lease remained on foot. In other words, the amount that is described as outstanding rent in the affidavit of Mr Birbara is described as an occupation fee in the invoices rendered by the Landlord's leasing agent. No doubt, this is because of my orders dated 4 January 2024 where I found that the Lease was validly terminated by notice dated 25 September 2023 but gave the Tenant the opportunity to be relieved from forfeiture of the Lease subject to all rent and outgoings, including future rent and outgoings being paid. Clearly, that did not occur and so the precondition to being relieved from forfeiture was not satisfied. Nevertheless, the Tenant continued to occupy the Premises until on or about 15 January 2024.
4. Whether the Landlord has correctly identified the amount described as an occupation fee in the leasing agent's invoice as rent is largely irrelevant because the amount charged is the same. To the extent that it is an occupation fee, I find that the amount charged is reasonable, given that it is the same that would otherwise have been charged had the Lease remained on foot.
5. The line items set out in the above invoices correlate, either directly or indirectly with the Tenant's obligations to make payment under the Lease. Specifically, the amounts relating to council rates, insurance, and water rates are all outgoings which are payable under the Lease. Insofar as those outgoings relate to a period after the Lease came to an end, I find that those expenses remain to be paid or reimbursed by the Tenant, given that it remained in occupation and had the benefit of possession over the period where those outgoings were levied. In my view, the failure to be reimbursed for the Landlord's payment of those outgoings are a direct result of the Tenant having breached the Lease and constitute part of the damages reasonably incurred by the Landlord by reason of that breach.
6. Consequently, I find that the claim of $70,005.05 representing rent, outgoings and other charges is proven.

1. The Landlord claims $304,109.59 representing rent forgone. The claim, which is in the nature of damages, arises because the Lease was lawfully terminated by the Landlord on 25 September 2024. Consequently, the Landlord has forgone rent under the Lease until 31 January 2027, being the end of the Lease term. However, as indicated above, an occupation fee commensurate with the amount of rent (inclusive of GST) was invoiced and already forms part of the Landlord's claim for rent and outgoings in arrears as discussed above. That claim extends to the end of January 2024. Therefore, the period in which no rent (or occupation fee) was received is confined to approximately 3 years or 36 months, commencing 16 January 2024 until 30 January 2027.
2. There is no evidence before me that the Premises have not been re-let or currently remain unoccupied. Nor is there any evidence before me that that circumstance is likely to continue until 30 January 2027. Similarly, there is no evidence before me of any attempt by the Landlord to re-let or other circumstance which would prevent the Landlord from reasonably offering the Premises for lease to another person.
3. In my view, the claim for loss of rent is presumptive as it assumes, hypothetically, that the Premises will remain vacant until 30 January 2027. In my view, there is insufficient evidence to substantiate that claim. Having said that, I find that some time will be required to reinstate the Premises to a condition reasonably commensurate with its condition at the commencement of the Lease. I also find that it is reasonable to assume that the Premises could not reasonably be leased during that period.
4. Doing the best with the evidence before me, I find that six months after the Tenant vacated the Premises represents a reasonable period in which to undertake reinstatement works and re-let the Premises. In other words, from 16 January to 16 July 2024. Therefore, I find that $50,000 represents the reasonable quantum of loss or damage suffered by the Landlord by reason of the Tenant's breach of Lease after the Tenant vacated the Premises on 15 January 2024. That amount is equivalent to six months of rent, excluding GST ($8,333.33 per month) that would otherwise have been payable had the Lease remained on foot and the Tenant remained in possession. As I have already found, I do not accept that in circumstances where the Lease was lawfully terminated and the Tenant has vacated, it is open to find that the Landlord is entitled to rent forgone for the remainder of the original Lease period, without there being evidence indicating that the Landlord would be unable to relet the Premises for that time.
5. Consequently, I find that the claim for rent foregone is partially proven in the amount of $50,000.

1. There are no submissions or calculations concerning the payment of interest on the amounts owed or any judgment amount. This is notwithstanding that the counterclaim purportedly claims interest. However, it is unknown whether interest is claimed pursuant to clause 2.1.7 of the Lease or pursuant to s 91(2) of the Retail Leases Act 2003 (Vic) ('RLA') or otherwise.
2. In my view, a clause within the Lease requiring a tenant to pay interest may be inconsistent with s 91(2) of RLA. That provision governs what the Tribunal may do in terms of ordering the payment of interest. That subsection states:

(2) In ordering the payment of a sum of money by a party, the Tribunal may order the payment of interest on that sum by the party at the rate fixed from time to time under section 2 of the Penalty Interest Rates Act 1983 or at any lesser rate it thinks appropriate.

1. Clause 2.1.7 of the Lease specifies interest to be paid at 2% above the Penalty Interest Rates Act 1983 (Vic). In my view, that clause is inconsistent with s 91(2) of the RLA because it prescribes for the payment of interest above the maximum rate permitted under that provision. Therefore, I find that clause 2.1.7 of the Lease is void pursuant to s 94 of the RLA.
2. Consequently, the question whether to order the payment of interest falls to be determined under s 91(2) of the RLA and is discretionary.
3. Given that there are no submissions as to why it would be fair to order interest, I decline to do so in respect of the Landlord's claim, insofar as it seeks unliquidated damages. Conversely, I find that it would be fair to order interest but only on the rent (or occupancy fees) and outgoings in arrears up to the date that the Tenant vacated, given that those amounts are more likely to be a debt certain, as opposed to the claim for unliquidated damages claim, which comprises the cost for reinstating the Premises and rent forgone.
4. In other words, the unliquidated damages claim for reinstatement of the Premises and rent forgone rely on several factors to prove that claim, which include an estimate of the cost to make good and a determination as to whether the Landlord is entitled to be compensated for rent foregone. This is different to the requirement to pay rent (or occupancy fees) and outgoings while the Tenant was in possession, an obligation that was inexorably linked to specific terms of the Lease.
5. Therefore, I will order interest on the amount determined in respect of the claim for rent (occupancy fees) and outgoings in arrears ($70,005.05) from the date that the Landlord filed its Points of Counterclaim (29 April 2024) until the Tenant vacated on 15 June 2024, at 10.5 percent (261 days), which amounts to $5,242.54.

1. It is trite to state that the Guarantor and the Tenant are separate legal entities, notwithstanding that the Guarantor is or was a director of the Tenant. Under the guarantee and indemnity provided by the Guarantor, the Guarantor is liable to pay any amount which the Landlord is entitled to recover from the Tenant under the Lease. Further, the Guarantor is to indemnify the Landlord against all loss resulting from the Landlord having entered into the Lease with the Tenant.
2. It is also trite to state that the Guarantor is not liable for loss or damage suffered by the Landlord which is not directly related to the Tenant having breached the Lease. The guarantee and indemnity provided by the Guarantor is inexorably linked to the Tenant's obligations under the Lease, such that the Guarantor will not be liable if the damages claimed by the Landlord against the Tenant flow from some circumstance, other than from a breach of the Lease.
3. However, in my view, the amounts claimed by the Landlord all result from the Tenant having breached its obligations under the Lease. Clearly, the payment of rent and outgoings was an obligation under the Lease which was not fulfilled. Similarly, the failure to maintain the grounds and gardens in good condition or to make good damage to the Premises caused by the Tenant constitutes a further breach of the Lease. Finally, the loss resulting from the Lease not being performed, either because it was lawfully terminated because of the Tenant's breach or because the Tenant prematurely vacated the Premises, are also losses attributable to the Tenant having breached its obligations under the Lease.
4. Consequently, I find that the Guarantor is jointly and severally liable to the Landlord under the guarantee and indemnity given by him to the Landlord for the amount found to be proven as against the Tenant.

1. It is common ground that the Lease is a retail tenancy lease. Therefore, the RLA applies to govern the relationship between the parties and regulate the powers of the Tribunal on the question of costs. Section 92 of the RLA states, in part:

(1) Despite anything to the contrary in Division 8 of Part 4 of the Victorian Civil and Administrative Tribunal Act 1998, each party to a proceeding before the Tribunal under this Part is to bear their own costs in the proceeding.

(2) However, at any time the Tribunal may make an order that a party pay all or a specified part of the costs of another party in the proceeding but only if the Tribunal is satisfied that it is fair to do so because -

(a) the party conducted the proceeding in a vexatious way that unnecessarily disadvantaged the other party to the proceeding; or

(b) the party refused to take part in or withdrew from mediation or other form of alternative dispute resolution under this Part.

(3) In this section, "costs" includes fees, charges and disbursements.

1. The Landlord submitted that the Tenant has conducted the proceeding in a vexatious way, enlivening the Tribunal's jurisdiction to exercise its discretion on costs under s 109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) ('the VCAT Act'). In support of that submission, the Landlord contends:

(a) despite been granted relief against forfeiture subject to payment of rent and outgoings in arrears, the Tenant failed to make payment of rent and outgoings in arrears and remained in occupation without paying rent until 15 January 2024;

(b) the Tenant did not pay any arrears of rent and outgoings after it vacated the Premises; and

(c) the Tenant caused an adjournment of the hearing on 19 October 2023 because it belatedly filed material without giving the Landlord an opportunity to consider that material.

1. The Landlord referred me to the decision of the Victorian Court of Appeal in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd,[7] where the Court stated:
   1. Section 92(2)(a) was considered by Deputy President Bowman in State of Victoria v Bradto Pty Ltd and Timbrook Pty Ltd ('Bradto'). He observed that the provision requires a Tribunal to be satisfied that it is fair to order costs because a party conducted the proceeding in a vexatious way and that such conduct unnecessarily disadvantaged another party to the proceeding. Deputy President Bowman referred to the distinction between a proceeding which is conducted in a vexatious manner and the bringing or nature of the proceeding being vexatious. He held that a proceeding is conducted in a vexatious manner 'if it is conducted in a way productive of serious and unjustified trouble or harassment, or if there is conduct which is seriously and unfairly burdensome, prejudicial or damaging.' This encapsulates the circumstances in which conduct may be classified as vexatious.[8]
2. I am not satisfied that the circumstances which have been highlighted by the Landlord could reasonably be said to be conduct which is productive of serious and unjustified trouble or harassment or seriously and unfairly burdensome, prejudicial or damaging. Although the proceeding has had a long and chequered history, there are aspects of the proceeding where the Tenant succeeded in obtaining interlocutory relief. Moreover, the mere fact that the Tenant has breached the terms of the Lease, of itself, does not mean that the Tenant has conducted the proceeding in a vexatious way.
3. It is clear from the affidavit material filed in this proceeding that the Tenant experienced significant difficulties in realising the business opportunities offered by the Premises. As highlighted in my previous determinations, the discovery of structural problems with the Premises and having to comply with regulatory requirements impeded the Tenant's ability to re-establish the garden areas and associated soft and hard landscaping. No doubt this had a significant and adverse effect on the Tenant's ability to derive income, as it was unable to operate the function and reception centre to its full potential.
4. In my view, it is reasonable to infer that the failure to operate the business to its full potential led to financial difficulties and, by extension, the non-payment of rent and outgoings. It was these factors which led to the initiation of this proceeding and its continuance after the Landlord filed its counterclaim.
5. I accept that there were several occasions where the Tenant failed to attend a directions hearing or failed to comply with orders (such as filing Points of Claim or Points of Defence to Counterclaim). However, I am not satisfied that this occurred because of contumelious disregard for orders. Indeed, there is correspondence and some material filed by the Guarantor, either on his own behalf or on behalf of the Tenant, which indicated that he was unwell. Moreover, I am of the view that the case management of the proceeding mitigated the disadvantage suffered by the Landlord, as the non-compliance with orders ultimately resulted in self-executing orders being made in favour of the Landlord - both in respect of the Tenant's claim and the Landlord's counterclaim.
6. Therefore, when weighing all those factors, I am not satisfied that it can be said that the Tenant has conducted the proceeding vexatiously. Therefore, I do not consider that the threshold requirement under s 92(2)(a) of the RLA has been satisfied in this case. There will be no order as to costs, save for those costs attributed to default notices, which I consider to form part of the Landlord's contractual claim for damages, rather than costs under s 109 of the VCAT Act. Those costs comprise part of the invoices rendered by the Landlord's leasing agent referred to above.

1. Having regard to my findings set out above, I will order that the Tenant and the Guarantor pay the Landlord, $300,165.17 calculated as follows:

[1] The Monaco Au Pty Ltd v Bondella Pty Ltd (Building and Property) [2023] VCAT 632; The Monaco Au Pty Ltd v Bondella Pty Ltd (No 2) (Building and Property) [2024] VCAT 18.

[2] The Monaco Au Pty Ltd v Bondella Pty Ltd (Building and Property) [2023] VCAT 632, [39].

[3] Exhibit bundle to the affidavit of Michael Kiriakidis dated 2 November 2023, 121-122.

[4] Exhibit bundle to the affidavit of Michael Kiriakidis dated 2 November 2023, 118-120.

[5] Exhibit bundle to the affidavit of Michael Kiriakidis dated 2 November 2023, 116-117.

[6] Exhibit bundle to the affidavit of Andrew William Birbara dated 30 July 2024, 31 of PDF.

[7] [2015] VSCA 216.