The landlord's application for a declaration that the guarantor was liable under the lease guarantee and indemnity to pay a costs order previously made against the tenant was dismissed; the guarantor's cross-application for costs was also dismissed. The Tribunal held that the tenant's act of vexatiously conducting an unsustainable claim against the landlord constituted a novus actus interveniens, breaking the chain of causation between the landlord's entry into the lease and the costs loss, such that the indemnity in the lease did not extend to cover a costs order arising from the tenant's failed litigation. The guarantee clauses (requiring the guarantor to ensure the tenant performed its lease obligations and to pay amounts recoverable under the lease) were also held inapplicable because the costs order arose from Tribunal litigation, not from obligations or amounts due under the lease itself. On the guarantor's costs application, the Tribunal held that the landlord's reliance on broadly worded guarantee and indemnity provisions was not vexatious, even though ultimately unsuccessful, as the issue was finely balanced and not brought for an improper purpose.
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