Landlords’ ability to sue retail tenants’ guarantors at VCAT to be clarified

A vexing issue in the retail tenancies list at VCAT has been whether and when a landlord can sue a retail tenant’s guarantor at the Tribunal.

This issue was addressed by the Cavanough J in Tucci v Victorian Civil and Administrative Tribunal & Anor [2010] VSC 425, in which the Court held that a landlord could sue a tenant’s guarantor in the Tribunal under the consumer and trader provisions of the Fair Trading Act 1999 (Vic).  

However, while the decision was a very useful one, identifying the Tribunal’s jurisdiction through this circuitous route has always been a source confusion in the legal and retail communities.

The Courts Legislation Miscellaneous Amendments Bill 2014 (Vic) has been tabled before Parliament and contains a proposed amendment to the Retail Leases Act 2003 (Vic) that expands the definition of ‘retail tenancy dispute‘ to include a claim by a landlord against a guarantor. 

The second reading speech states that:

The bill will also amend the Retail Leases Act 2003 to allow the tribunal to make orders against a guarantor or indemnifier of a tenant’s obligations under a retail premises lease and will allow a guarantor or indemnifier to refer a retail tenancy dispute to the small business commissioner for mediation. These amendments will allow parties involved in retail tenancy disputes to have their issues comprehensively addressed by mediation and, should it be necessary, at the tribunal, without the expense of a separate court proceeding.

The Tribunal’s jurisdiction is not exclusive.  At this stage, landlords will still be able to sue guarantors in a court if they elect to do so.

The second reading speech for the bill took place on 24 June 2014.