Australia: Landlord vs guarantor: VCAT the right place, says Supreme Court

Real Estate Markets Insights
Last Updated: 19 December 2010
Article by Kym Fraser

Victorian retail leasing disputes consisting of claims by a landlord against tenants and guarantors, which have previously been decided in separate forums, are likely to now be heard together in the Victorian Civil and Administrative Tribunal (VCAT), following the Victorian Supreme Court's decision in Michael Tucci v Victorian Civil and Administrative Tribunal and Athedium (Vic) Pty Ltd [2010] VSC 425.

The Court held that VCAT has jurisdiction to hear disputes as between a landlord and guarantor under the Fair Trading Act 1999 on the basis that providing a guarantee is a provision of a service within the meaning of section 107 of the Act.

The lease and the guarantee

Athedium leased premises to Matchpoint Pty Ltd for use as an indoor tennis and volleyball complex. A guarantee and indemnity was attached to the lease, provided by Michael Tucci, who was the sole director of Matchpoint.

Among other things, Athedium claimed that Matchpoint failed to leave the premises in good repair when the lease expired in 2008. It brought a civil claim in the Retail Tenancies List of VCAT claiming breach of the lease and damages from Matchpoint. Athedium also claimed damages against Tucci personally, as a debt owing by him or, in the alternative, an order that Tucci indemnify Athedium for the loss suffered as a result of Matchpoint's alleged breach under the guarantee and indemnity given by him.

Tucci applied for summary dismissal of the claims made against him on the grounds that VCAT did not have jurisdiction to hear them. It is likely that Tucci made that argument for strategic reasons, because if it succeeded it would have required Athedium to commence separate proceedings in the Supreme Court against him, whilst maintaining separate proceedings against Matchpoint in VCAT. Multiple claims in different forums mean maximum cost and inconvenience for a plaintiff!

VCAT's jurisdiction to hear consumer and trader disputes

The Victorian Court of Appeal had previously established that VCAT is the appropriate Tribunal to hear disputes between a landlord and tenant under a retail lease (Zeus & RA Pty Ltd v Nicolaou (2003) 6 VR 606).

The central issue in Tucci was whether the statutory provisions of the Act gave VCAT jurisdiction to hear and make orders with respect to a dispute between a landlord and a guarantor of the tenant's obligations.

Section 108 of the Fair Trading Act provides that VCAT may hear and determine a "consumer and trader dispute", which is defined in section 107 as:

"a dispute or claim arising between a purchaser or possible purchaser of goods or services and a supplier or possible supplier of goods or services in relation to a supply or possible supply of goods or services".

Services are defined to include "any rights (including rights in relation to, and interests in real or personal property), benefits, privileges or facilities that are, or are to be, provided, granted or conferred in trade or commerce".

The question was whether by providing the guarantee, Tucci was supplying a "service" to Athedium as defined in the Act. VCAT held he had; Tucci then appealed to the Supreme Court.

Supreme Court Appeal

Tucci made two arguments.

First, he argued, the Fair Trading Act does not define a "consumer and trader dispute" with reference to a guarantor. He contended that a "consumer and trader" dispute is expressly limited to a dispute arising between a purchaser of services and a supplier of services, which can include a tenant and landlord. Tucci submitted that a guarantor is a "third party" to the lease arrangement and therefore VCAT's jurisdiction cannot extend to a dispute between Athedium and himself as guarantor of Matchpoint's obligations.

Secondly, Tucci argued that a guarantor does not provide a "service" as defined in the Act. A guarantee, he said, is an agreement to answer for a third party's debt under a contract, or an "obligation to pay money on a contingency", which does not require a supplier to perform its contractual obligation by providing a service. If "supplier" was defined to include a guarantor, it would follow that VCAT would have jurisdiction to hear and determine very large claims or disputes arising from any and all guarantees given in trade in Victoria (even multi-million dollar developments). He contended that Parliament could not possibly have intended this result.

The Supreme Court's interpretation of a "service" under the Fair Trading Act

The Supreme Court held that VCAT did have jurisdiction to hear the dispute between Athedium as landlord and Tucci as guarantor. The provision of the guarantee by Tucci was a "service" within the meaning of the Act. Tucci, by guaranteeing Matchpoint's obligations under the lease agreement was providing "financial security" to Athedium.

The Supreme Court clearly rejected the argument that the definition of "services" is limited to contracts for service which require the supplier to perform its contractual obligation by providing a service such as the provision of legal or medical services. "Services" as defined in the Act includes "any rights (including rights in relation to real or personal property)". The courts have interpreted this definition to include disputes about the sale of land or interests, with the vendor providing a "service" to the purchaser.

The Supreme Court also found that VCAT has a very wide jurisdiction under the Act and is authorised to hear and determine very large claims or disputes. It was not the intention of Parliament that VCAT be restricted to hearing only minor disputes or claims. Under the Act, VCAT has jurisdiction to hear consumer and trader disputes without limitation as to the quantum of the claim. The Plaintiff's "professed incredulity that VCAT could be given such broad jurisdiction as the Act appears to give it", was not to the point.

So we are off to VCAT?

VCAT has traditionally had jurisdiction to hear retail tenancy disputes between landlords and tenants pursuant to its jurisdiction under both the Retail Leases Act and the Fair Trading Act (the landlord being a "supplier" and the purchaser a "consumer").

The Tucci case confirms that VCAT's jurisdiction is wide enough to also include disputes between a landlord and a guarantor of the tenant's obligations. This will make it procedurally simpler for the landlord to pursue its claims for breaches of the lease against all relevant parties in the one forum.

Previously, there was a real risk that claims by a landlord against a tenant were heard in VCAT, and the landlord's claim against the guarantor of the tenant's obligations would be heard in the Supreme Court.

There are procedural issues that need to be considered when a matter is heard in VCAT. VCAT is not bound by the rules of evidence except to the extent that it adopts those rules. Parties are generally required to bear their own costs in a proceeding and VCAT will make a costs order only if it is satisfied that it is fair to do so having regard to certain conduct of the parties during the proceeding.

Finally, a curiosity remains from the decision. Disputes based on subrogation between multiple guarantors of a tenant's obligations might not be a dispute between a "purchaser" and "supplier" under the Act, and it remains likely that such a dispute between guarantors about their proportionate liability to the landlord, is likely to have to be determined by another court (most likely the Supreme Court).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.