VICTORIAN CIVIL AND ADMINISTRATIVE TRIBUNAL
CIVIL DIVISION
BUILDING AND PROPERTY LIST	
vcat reference No. BP1809/2019	
CATCHWORDS	
COSTS AND INTEREST – contractual entitlement to interest – calculation of interest – Costs under Retail Leases Act 2003 (Vic) – sections 81 and 92 Retail Leases Act 2003 (Vic) – meaning of a ‘retail tenancy dispute’ – vexatious conduct.	

APPLICANT	Bebe Nanaki Ji CHC Pty Ltd (ACN: 108 719 311)	
FIRST RESPONDENT	Sovereign Healthcare Pty Ltd (ACN: 132 978 744)	
SeCOND RESPONDENT
(SECOND APPLICANT BY COUNTERCLAIM)	CHPF South Bunbury Pty Ltd (as Trustee for the CHPF Hobart Sub Trust)	
THIRD RESPONDENT
(THIRD APPLICANT BY COUNTERCLAIM)	Perpetual Corporate Trust Limited as Custodian for Centuria Property Funds Limited (as Trustee for Nexus Property Unit Trust)	
WHERE HELD	Melbourne	
BEFORE	H. Nash, Member	
HEARING TYPE	On the Papers	
DATE OF HEARING	3-7 August 2020, 21 September 2020	
date of submissions	17 May 2021 and 25 June 2021	
DATE OF ORDER	1 October 2021	
CITATION	Bebe Nanaki Ji CHC Pty Ltd v Sovereign Healthcare Pty Ltd (Costs) (Building and Property) [2021] VCAT 1142	

Order
The Tribunal orders that:
1	The applicant must pay the first respondent interest in the sum of $14,594.54 together with a further $25.54 per day after 9 July 2021 until the arrears of rent are paid.
2	The first respondent’s application for costs is dismissed.
3	Each party shall pay their own costs of the proceeding.

H. Nash
Member			

Reasons
1	Pursuant to Orders made on 25 May 2021, the first respondent (landlord) has made written submissions as to its entitlement to:
i	interest on the outstanding rent for which payment was ordered on 5 July 2021; and
ii	for payment of its costs of the proceeding.
2	The applicant (tenant) has not made any written submissions in relation to the question of interest, only on the issue of costs.
3	On 9 April 2021 the Tribunal gave its reasons for its findings as to the proper interpretation of the rent clause in the lease. On 5 July 2021 the Tribunal ordered the tenant to pay to the landlord rent arrears in the sum of $77,818.75.
4	The background to this dispute is set out in the reasons dated 9 April 2021 at [2021] VCAT 330. I do not intend to go into those matters in detail in these Reasons.
5	In summary, the dispute involved the construction and interpretation of the rent clause in a retail lease for a pharmacy at a suburban medical centre. The calculation of the rent for each month is dependent on the number of doctors working at the medical centre. The Tribunal found the clause was to be interpreted in a manner consistent with the landlord’s interpretation of the clause.
6	The Tribunal also determined the information the landlord was required to provide to the tenant in support of its demand for rent.
7	The Tribunal also found in the landlord’s favour as to the validity of notice under section 146 of the Property Law Act 1958 (Vic). However, the tribunal found that the landlord had, by its conduct, waived its right to forfeit the Lease in reliance on the notice under section 146 of the Property Law Act 1958 (Vic).
interest
8	The landlord seeks interest on the arrears of rent in accordance with the terms of the lease dated 21 December 2016 between the landlord and tenant (the Lease). Clause 10.9 of the Lease provides
Without prejudice to the rights, powers and remedies of the Landlord otherwise under this Lease the Tenant will pay to the Landlord interest at the rate that is 2% higher than the rate set under Section 2 of the Penalty Interest Rates Act 1983 on any moneys due by the tenant to the Landlord in any account whatsoever pursuant to this lease but unpaid for seven (7) days such interest to be computed from [the] due date for the payment of the moneys in respect of which the interest is chargeable until payment of such moneys in full and be recoverable in like manner as Rent in arrears.
9	No argument has been raised by the tenant that the landlord is not entitled to interest under the terms of the lease nor as to when such interest entitlement accrued.
10	The terms of the Lease are clear as to the landlord’s contractual entitlement to interest on unpaid rent. Having found that the tenant is in arrears of rent and determining it was to pay to the landlord the sum of $77,818.75, I find that the landlord is entitled to interest on those outstanding monies pursuant to its contractual entitlement under the Lease.
11	The landlord has submitted that as at 17 May 2021, it is entitled to $13,240.92 in interest on the arrears of rent and that such interest continues to accrue at the rate of $25.54 per day until the rent arrears are paid. In the absence of any evidence or submissions to the contrary I accept the landlord’s calculations.
12	I have no evidence before me as to if or when the arrears of rent have been paid by the tenant.
13	On 9 July 2021 when this Tribunal ordered the tenant to pay to the landlord arrears of rent in the sum of $77,818.75, interest as at that date was $14,594.54.
14	I will therefore order the tenant to pay to the landlord interest in the sum of $14,594.54 together with a further $25.54 per day after 9 July 2021 until the date the rent is or was paid.
costs
15	The landlord has made an application seeking an order for its costs in the proceeding to be paid by the tenant on a standard basis on the Supreme Court scale to be assessed by the Costs Court in default of agreement under section 109 of the Victorian Civil and Administrative Tribunal Act 1998 (Vic) (VCAT Act).
16	The landlord contends that the dispute between the parties is not a retail tenancy dispute as defined in section 81 of the Retail Leases Act 2003 (Vic) (RLA) and therefore, its application for costs is not subject to section 92 of the RLA.
17	Section 92 provides
92	Each party bears its own costs
(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 its 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.
18	Section 92 falls within Part 10 of the RLA which is the part of the RLA which applies to dispute resolution. Therefore, the reference in section 92(1) to “a proceeding before the Tribunal under this Part” is a reference to Part 10 of the RLA.
19	Part 10 applies to a retail tenancy dispute. A retail tenancy dispute is defined in section 81 of the RLA as
81	Meaning of retail tenancy dispute
(1)	In this Part, retail tenancy dispute means a dispute between a landlord and tenant—
(a)	arising under or in relation to a retail premises lease to which—
	(i)	this Act applies or applied because of Part 3; or
	(ii)	the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 applies or applied; or
(b)	arising under a provision of the Retail Tenancies Reform Act 1998 or the Retail Tenancies Act 1986 in relation to a lease to which that Act applies or applied; or
(c)	arising under a lease that provides for the occupation of retail premises in Victoria to which none of those Acts apply or applied—
despite anything to the contrary in this Act (apart from subsection (2) and section 119(2)).
	(1A)	In addition, a retail tenancy dispute includes—
(a)	a dispute between a landlord and a guarantor of a tenant's obligations under a lease arising in circumstances referred to in subsection (1)(a), (b) or (c); and
(b)	a dispute between a landlord and a person who has given an indemnity to the landlord for loss or damage arising as a result of a breach by a tenant of a lease in circumstances referred to in subsection (1)(a), (b) or (c).
(2)	However, retail tenancy dispute does not include a dispute solely relating to the payment of rent or a dispute that is capable of being determined by a specialist retail valuer under section 34, 35 or 37 of this Act or under section 12A or 13A of the Retail Tenancies Reform Act 1998 or section 10 or 11A of the Retail Tenancies Act 1986.
20	The landlord submits that this dispute is not a retail tenancy dispute as it falls within the exception in section 81(2) as a dispute solely relating to the payment of rent. It argues that the essence of the dispute between the parties was whether rent was payable under the Lease and that it was, therefore, a dispute about the payment of rent.
21	The tenant submits that the dispute is not confined to a dispute solely relating to the payment of rent as it encompassed the interpretation of the rent clause in the Lease, how rent was to be calculated, and in what circumstances the tenant was to pay rent. It also involved a determination of what information and documentation the landlord was required to provide to the tenant in support of its demand for rent.
Discussion
22	I reject the landlord’s submission, not being persuaded that the dispute simply concerned the payment of rent and find that the dispute is a retail tenancy dispute as defined in s.81 of the RLA.
23	A dispute relating to the payment of rent which falls within section 82(2) of the RLA is a dispute which is limited in its scope to quantum or the period of time for which rent is payable.
24	It does not include whether or not rent is payable under the terms of the relevant lease or how any rent payable is to be calculated. Nor does it include what information the landlord is required to provide to a tenant to support the demand for rent.
25	This proceeding concerned more than a determination of the quantum of rent payable by the tenant or the time period for which the tenant is in arrears of rent. It required a consideration of a number of factors including:
a.	the construction and interpretation of the rent clause and thereby whether the landlord was entitled to claim rent,
b.	what information the landlord was required to provide to the tenant in support of the landlord’s calculation of, and demand for, rent,
c.	 whether a notice of default under section 146 of the Property Law Act 1958 (Vic) was valid,
d.	whether the right to forfeit the lease had accrued to the landlord and if so, whether that right had been waived and
e.	 whether if certain matters had been established, the tenant was entitled to relief against forfeiture.
26	As the dispute is a retail tenancy dispute section 92 of the RLA applies and the circumstances in which an order for costs could be made in favour of the landlord are limited:
i	if the tenant had refused to take part in mediation, or
ii	if the tenant had conducted the proceeding against the landlord in a vexatious manner.
27	First, as recorded on the certificate issued by the Small Business Commissioner, the tenant was willing to participate in mediation: the landlord was not.
28	The landlord argues that it was only belatedly, in September 2019, that the tenant raised its contentions about the interpretation of the rent clause in the lease and it was this position which resulted in the commencement of these proceedings. The landlord contends that this conduct is relevant in considering an application for costs, particularly where it is this conduct that is responsible for the proceeding being brought. It does not go so far as to argue explicitly that such conduct is vexatious.
29	The Court of Appeal in 24 Hour Fitness Pty Ltd v W & B Investment Group Pty Ltd stated
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 the 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.
30	I am not persuaded that the tenant has conducted the proceeding in a vexatious manner. To put an opponent to proof or to run an arguable case which was neither fanciful nor without merit, is not in my view vexatious.
31	I therefore dismiss the landlord’s application for an order for costs and will order that each party shall pay their own costs.

H. Nash
Member