Applicant v Respondent

1 The applicant seeks leave to discontinue this proceeding because, she says, the subject matter, a dog named 'Buddy', has been unlawfully removed from the custody or possession of the respondent. These reasons involve a consideration of what order for costs should be made consequent on the discontinuance, in particular having regard to the terms of r 25.05 and r 63.15 of the Supreme Court (General Civil Procedure) Rules 2005 ('Rules').

2 The proceeding is an application for leave to appeal an order made by a Senior Member of the Victorian Civil and Administrative Tribunal ('VCAT'). The originating motion (filed 6 June 2014) seeks leave to appeal from paragraphs 1-4 of an order made on 13 May 2014.[1] By that order the applicant ('Dina' or the 'applicant') was refused leave to extend the time within which to apply to VCAT to review a decision of the respondent ('Council') declaring the dog 'Buddy' a restricted breed, but subject to the condition that the Council carried out a further assessment of the dog, and the result of that assessment was that the dog is a restricted breed dog. The orders made, and the reasons for them, are more complex than that, and I will deal with them later in these reasons.

3 The applicant brought her application on by summons on 24 July 2014. On that occasion the Court was told that the dog had been assessed in accordance with the order of the Senior Member as a restricted breed dog, but that the dog had been unlawfully removed from the Council's custody by a person or persons unknown and had not been recovered. At the request of the parties the application was adjourned. When the matter came back to the Court the dog had still not been recovered and there was a further adjournment.

4 The matter came on again on 4 February 2015 at which time the applicant informed the Court that the dog had still not been recovered by the Council and she wished to discontinue the proceeding. Submissions were made then and there by Mr Andrew Denton of Counsel on behalf of Dina that this was a case where the application of the Rules, and the exercise of the discretion of the Court, lead to the appropriate order being that the parties should bear their own costs. That was because there had been a supervening event, the disappearance of the dog 'Buddy', an event beyond the applicant's control.

5 The respondent, represented by its solicitor, Ms Elliot, submitted that the Council wished to have the opportunity to advance evidence that it was Dina's daughter, Niki Soteriadis, who was directly or indirectly responsible for the unlawful removal of the dog from the Council's custody, and to make submissions in relation to the question of costs.

6 Directions were made for the filing and service of affidavits and outlines of submissions as to the question of costs. The matter was adjourned to 16 April 2015. In the meantime the responsible solicitors for the Council became unwell and the dates for filing and service of affidavits by the Council were extended, over the objection of Counsel for Dina. Ultimately the Council adduced no evidence relevant to the allegation that the applicant's daughter was in any way responsible for the removal of the dog. It relied on the evidence before VCAT as recounted in the reasons of the Senior Member.

7 There are two parts to the costs question. The first concerns the costs of the proceeding. The second concerns the costs incurred by the applicant since 4 February 2015, when directions were made for the filing and service of affidavits and submissions. Before turning to the subject matter of the proceeding and the events since 4 February in some more detail, I will summarise the applicable law.

8 The starting point is the Court's general power as to costs. Unless otherwise expressly provided by any Act or by the Rules, the costs of and incidental to all matters in the Supreme Court are in the discretion of the Court, and the Court has full power to determine by whom and to what extent the costs are to be paid: Supreme Court Act 1986 (Vic) s 24(1).

9 The discretion regarding costs has been described as absolute, unconfined or unfettered, although that discretion must be exercised judicially, that is, not by reference to irrelevant or extraneous considerations, but upon facts connected with or leading up to the litigation: see for example Latoudis v Casey.[2] In the exercise of the discretion, practices or guidelines have been developed: Oshlack v Richmond River Council.[3] These practices or guidelines are not legal rules that confine the exercise of the discretion: Norbis v Norbis;[4] Oshlack v Richmond River Council.[5]

Where a proceeding, counterclaim or claim by third party notice is discontinued, or where part of a proceeding, counterclaim or third party notice is withdrawn, liability for costs shall be determined in accordance with Rule 63.15.

Discontinuance or withdrawal

Unless the Court otherwise orders, a party who discontinues or withdraws part of a proceeding, counterclaim or claim by third party notice shall pay the costs of the party to whom the discontinuance or withdrawal relates to the time of the discontinuance or withdrawal.

12 By these rules the wide discretion of the Court as to costs is modified. The modification is that the onus is on the party seeking to discontinue the proceeding (in this case the applicant) to satisfy the Court that the costs should not be paid by her. The principles and factors that the authorities outline on these, and other similar rules in other jurisdictions, have been collected and summarised by Hallen AsJ (as he then was) in Johnson & Anor v Clancy & Anor.[6] My summary of them is as follows:[7]

(a) The rule does not give rise to a presumption that costs will be ordered against the discontinuing party;

(b) However, the rule does create a starting position for the plaintiff or discontinuing party to pay the defendant's costs, subject to a contrary order;

(c) The contrary order itself involves a discretionary decision to be exercised judicially. If there is to be a departure from the starting position, it should be done in a particularised, and principled way. The Court is required to make such order as it thinks just in the particular circumstances of the case;

(d) The burden is on the party who seeks to persuade the Court that a contrary order should be made. If facts are to be relied upon to found the Court making a different order, the plaintiff will bear the onus of proving the relevant facts;

(e) All the relevant circumstances, and not just the fact of discontinuance, should be considered. This may include a consideration of the whole of the proceedings. Generally the discretion will be exercised on the basis of the objective circumstances established on the evidence and not involve the subjective considerations of one party;

(f) A relevant consideration is whether the plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them. It might also be appropriate for the Court to consider the conduct of the defendant prior to the commencement of the proceedings where such conduct may have precipitated the litigation;

(g) Generally there must be some proper justification, sound positive ground, or a good reason, for departing from the staring position. The reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs, so for example, it may be appropriate to make a contrary order:

(i) Where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff's control;

(ii) Where the plaintiff achieved practical success in the proceedings;

(iii) Where costs have been significantly increased by the unreasonable conduct of the defendant;

(h) Where the proceedings are discontinued prior to any hearing on the merits, usually it will be impracticable to assess the eventual prospects of success in the action and the Court cannot try a hypothetical action between the parties to determine the question of costs;

(i) There is a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs; and

(j) Where the proceedings are discontinued after interlocutory relief has been granted, the Court may take into account the fact that that interlocutory relief has been granted;

13 In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin, (one of the many cases cited by Hallen AsJ), McHugh J observed in a different context, that is not one where the starring position was an order for costs in favour of the defendant:[8]

The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action by which settlement or extra curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. ...

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried....

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continue to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the Court will make no order as to the cost of the proceeding. This approach has been adopted in a large number of cases. [footnotes omitted]

14 Dina and Niki Soteriadis acquired Buddy in late 2011. He is a male dog and was de-sexed on 12 January 2012. On 2 January 2013, Council officers attended Dina's home in Plenty in response to complaints about a 'rushing dog'. There was no-one at home but the dog was chained up inside the garage with the door partially open. The inspection through the door enabled the Council officers to form the view that the dog was a Pit-bull Terrier. They could not approach the dog because of its behaviour. On 3 January 2013, Buddy was micro-chipped and registered at the Council.

15 On 17 January 2013, Council officers returned to Dina's premises. Buddy was chained in the garage with the door slightly open. Dina Soteriadis was present. She showed them the dog. They were unable, however, to take the dog because Dina did not have sufficient influence or control over him. It was agreed that Dina would arrange for the Council officers to take the dog when Niki was at home and it was agreed that the Council officers would return at 8.00am the next day to collect the dog, at a time when it was anticipated Niki would be present.

16 The next morning, on 18 January 2013, Council officers attended Dina's premises as arranged. Neither Niki nor Buddy were present. A telephone conversation between a Council officer and Niki later in the morning revealed that Niki had taken the dog to a friend's house, but that he had disappeared from that place. There were long discussions during which the Council officers sought to make arrangements to locate and collect the dog, but Niki would not agree.

17 On 23 January 2013, Council officers attended Dina's home and spoke to Niki. She told the Council officers that she had not found 'her dog', that she had left it at her friend's house in the back yard with her friend's dog. Her friend was not at home at the time. The dog had then disappeared. She had sought to find it without success. She refused to give the name and address of her friend at whose place she had left Buddy.

18 On 13 February 2013, the Council declared that the applicant's dog, 'Buddy', was a restricted breed dog, namely a Pit-bull Terrier. Over a year later, on 19 February 2014, the applicant applied to VCAT for an extension of time to review the decision of the Council to declare her dog a restricted breed dog. The application proceeded on the footing that under s 98(2A) of the Domestic Animals Act 1994 a dog owner has 28 days within which to seek a review of a decision declaring a dog to be a restricted breed dog.[10]

19 In between those two dates the following events occurred, according to the Reasons of the Senior Member:[11]

(a) Both Dina and Niki were charged on summons with failing to produce Buddy, and Dina was also charged with owning a dog that had rushed a person outside her house. The charges alleged that the dog was a Pit-bull Terrier. The prosecution was set down on seven occasions and ultimately at a 'contest mention' on 10 February 2014 agreement was reached that the charges against Dina would be dropped and that Niki would plead guilty to a single charge of failing to produce the dog. At a plea hearing on 24 February 2014 Niki was fined $100, with conviction, and ordered to pay $1,000 costs;

(b) Niki gave evidence before VCAT that she thought that her plea of guilty would be the end of the matter. Her priority was always to protect her dog and the charges against her were of less significance to her;[12]

(c) She gave evidence that the first time she knew that she could challenge the Council determination that Buddy was a restricted breed dog was at the end of the hearing on 10 February 2014 (at which agreement was reached for Niki to plead guilty to one charge). Niki gave evidence that on learning of that right she changed her lawyer and an application to set aside the declaration was made on 19 February 2014; and

(d) The Tribunal was informed that the dog was impounded on 24 February 2014 following a further alleged attack on a girl.

20 In his Reasons, the Senior Member considered the evidence of Niki Soteriadis to be unsatisfactory in a number of respects.[13] There were many findings that are not presently relevant. I note the following findings:

(a) Although it is not clear where the dog was at various times between January 2013 and February 2014, it is clear from her evidence that Niki Soteriadis had control and custody of the dog for most of this time. She did not hand over the dog, she said, because the Council never asked her for it after the first occasion in January 2013. This, he said, was disingenuous;

(b) Niki Soteriadis said in evidence that she held onto the dog because she wanted to have it assessed according to the restricted breed dog standard herself, before the Council did. Yet she took no steps to have the dog assessed for the whole of the 12 months while it was in her custody or control; and

(c) She had said that the justification for taking the dog from her house after the Council officers had attended on 17 January 2013, but before they arrived at 8.00am the next morning, was that the visit by the officers had so upset the dog that she had to take it away. He found this was also disingenuous.

21 One of the principal issues before the Senior Member was whether or not the declaration made on 13 February 2013 had been served, and if so when. In the application in this Court, the applicant contended that this was a matter still in dispute. But the Senior Member found that it was received by Dina in February 2013, but that it may have not come to the notice of Niki until mid-June 2013 at the latest.

22 After considering the factors relevant to an extension of time under s 126 of the VCAT Act,[14] the Senior Member held that there were strong considerations against extending the time, including that the owners had not acted in good faith, they had hidden or kept the dog from the Council for over 12 months, and to extend time would undermine the statutory regime for the regulation of dogs. Further, having regard to the clear purpose of the provisions relating to restricted breed dogs being to provide the public with protection and security, the withholding of the dog ran very much contrary to those aims and that was a significant factor against an extension of time.

23 The Senior Member went on to refer to the fact that the Council officers had not carried out a hands-on inspection of the dog in a controlled environment. Although the officers were confident of their assessment of 'Buddy' as a Pit-bull Terrier, this was done on a visual inspection only whilst they were at the applicant's house. Subsequently they were prevented from carrying out an assessment in the normal way by the fact that the owners hid the dog from them. Conscious of the fact that the criteria to be applied to the determination of whether a dog was a restricted breed dog had changed on 31 January 2014, the Senior Member considered that, in order to avoid any injustice which might arise from the assessment made in January 2013 being relied upon now, he would refuse to extend the time but make that refusal conditional upon the Council carrying out a hands-on assessment of the dog by reference to the new standard. If that assessment confirmed the declaration then the time within which application may be made to review the assessment would be refused. If, on the other hand, the Council determined that the dog is not a restricted breed dog, then the time would be extended. He expected that the Council would consent to an order upholding the review application in that event.

24 After the application for leave to appeal was commenced, but before the summons for leave came on for hearing, the Council's solicitor had, by letter dated 24 June 2014, informed the applicant's solicitor that:[15]

Your client's dog buddy was illegally removed during the weekend from the location in which it was being held. Please advise if your client has any knowledge of his whereabouts.

25 The applicant's solicitors responded in the following terms:

Our client is extremely upset and most concerned that her dog Buddy has been illegally removed whilst in the care of your client.

Your client's failure to ensure the proper security and welfare of Buddy whilst in its care is totally unacceptable.

Further your notification of the illegal removal of Buddy is bereft of any apology to our client. You also make an unwarranted assertion that our client might have been involved in Buddy's illegal removal. This assertion is insulting and unnecessary when you are well aware that your client has consistently refused to advise of Buddy's location and has never allowed our client visitation rights.[16]

26 By letter dated 30 January 2015 the applicant's solicitors wrote to the Council's solicitors offering to discontinue the application on the basis that both parties bear their own costs. It was said in support of that proposal that the removal of the dog 'Buddy', from Council's premises, when the Council was responsible for its care and security, had resulted from circumstances beyond the control of the applicant. The appeal proceeding had thereby been rendered nugatory. It was said that this provided a basis for the applicant to have its costs from the respondent, but she was willing to discontinue on the basis that the parties bear their own costs.[17] Enclosed with the letter were draft consent minutes of order.

27 The applicant's solicitors, having received no response to its letter, followed up the offer by email and telephone on 3 February 2015. No response was received until after 5 pm on 3 February 2015, and that was a terse rejection of the offer. Before receipt of that letter, at about 3 pm on 3 February 2015, the solicitors for the applicant had informed the solicitors for the respondent that in the absence of a response the applicant would have to retain Counsel to appear the next day.

28 On 4 February 2015, the applicant applied to discontinue the proceeding because the subject-matter of it, the dog 'Buddy', had been unlawfully removed from the custody of the Council. At that time, as I have said, Mr Andrew Denton of Counsel made submissions in support of his contention that the appropriate order as to costs was that both parties should bear their own costs because the subject-matter of the application had disappeared, thus there was a supervening event beyond the applicant's control that rendered the further prosecution of the application nugatory. An outline of submissions was handed up at the time.

29 On that day, Miss Elliott, the solicitor for the Council, submitted that the costs should, in the ordinary way, be paid by the applicant because the unlawful removal of the dog from the custody of the Council was not such a supervening event as to warrant a variation from the starting point established by r 63.15 of the Rules. In support of that submission, Miss Elliott asserted from the Bar table that:

(a) There had been three attempts to steal the dog. The first two attempts occurred at the respondent's shelter after which the dog was moved to another location where a successful theft occurred following the cutting through of several wire fences;

(b) There was CCTV footage from the first two unsuccessful attempts that allegedly showed a female wearing a hooded jumper matching the height and weight of Niki Soteriadis; and

(c) These attempts all happened just after the VCAT decision the subject of the application was handed down (on 13 May 2014) resulting in the dog being, effectively, put on 'death row'.

30 These allegations were contested by Counsel for the applicant. The applicant sought to have the allegations substantiated by evidence on affidavit. Orders were made for the respondent file and serve any affidavits 'as to the incidence of the costs of discontinuance of the application', together with an outline of submissions, by 4 March 2015.[18] The applicant was also given an opportunity to respond. The matter was adjourned to 16 April 2015.

31 Despite the orders of 4 February 2015, the respondent did not file any affidavit substantiating the allegations that had been made from the Bar table by the date fixed. The respondent sought an extension of time. The matter was re-listed on 26 March 2015 to vary the timetable. This was said to be due to illness of the solicitors representing the Council. After the time was extended to enable the Council to file affidavits, still no affidavits were provided. On 9 April 2015, Mr Stafford, solicitor, provided an outline of submissions on behalf of the respondent.

32 The applicant submitted that it is open to the Court to exercise its discretion to depart from the starting point, or normal rule, that upon discontinuance an applicant is required to pay the costs of the respondent. In doing so, it relies upon the fact that the removal of the dog from the custody of the Council renders the application for leave to appeal, and the appeal, nugatory. Counsel for the applicant pointed to the fact that there is no evidence that the removal was a result of any action of the applicant, or her daughter, and that because the Council had the care and custody of the dog at the time of its removal, it was incumbent on it to ensure its safe-keeping. Thus, it is the inability of the Council to produce the dog that has denied the applicant the opportunity to properly present her appeal and, if successful, to have the matter reheard by VCAT according to law.

33 The applicant made reference to the unsubstantiated allegations made about the applicant's daughter being responsible for the removal of Buddy, to the duties of barristers and solicitors to the Court, and not to make any claim without a proper basis.[19] It was submitted that in the absence of proof of the assertions made from the Bar table by Miss Elliot, notwithstanding every opportunity made available by the Court for the Council to do so, the Court should find that the evidence does not exist.

34 The applicant also submitted that the conduct of the solicitors for the Council was a breach of the overarching obligations under the Civil Procedure Act 2010 ('CPA') which enlivens the Courts jurisdiction to award costs against the Council or their solicitors. The applicant submitted that because of the failure of the council to adduce any evidence to substantiate its claims made on 4 February 2015, all of those claims should be seen to have been made without a proper basis and therefore in breach of the overarching obligations. In the result, it was a case where from and including 4 February 2015 the Council or its solicitors should bear the applicants costs on an indemnity basis.

35 The applicant also contested the submissions of the respondent. I will refer to these submissions, if necessary, when considering the issues raised.

36 In its written submission the Council attempted to meet 'head-on' the submission of the applicant that the removal of the subject-matter of the litigation from the custody of the Council rendered the application for leave to appeal nugatory. It submitted that this involves a wrong analysis of the questions before the Court. The proceedings have not been rendered nugatory by the unlawful removal of Buddy from the Council's custody. Even if the applicant were successful in being granted leave to appeal, and then in the appeal, it would not result in possession of the dog being returned to the applicant. The appeal, it was submitted, concerned a procedural matter, the denial of procedural fairness by VCAT.

(a) The onus is on the applicant to show why costs should not be ordered against her;

(b) There is no conduct of the Council identified that contributed to the unlawful removal of the dog;

(c) In all the cases referred to where no order was made for the applicant to pay the costs, the proceedings were rendered unnecessary by circumstances beyond the control of the applicant;

(d) Although the Court will not embark on a hypothetical evaluation of the prospects of the applicant succeeding in her application, that does not mean the Court should ignore the likelihood of success (or failure) and does not treat a weak case in exactly the same way as a strong case;

(e) The Court may, and in this case should, consider the conduct of the parties which precipitated the litigation. The litigation can be traced back to the failure of Niki Soteriadis to produce Buddy when requested to do so. She broke the law and was uncooperative with the Council from whom she now seeks her costs should be paid;

(f) The existence of the dog is of indirect relevance to the conduct of the application for leave to appeal, and the appeal, because if the decision of VCAT is not overturned on appeal and the dog turns up, it must be destroyed;

(g) Despite the absence of evidence directly implicating the applicant or her daughter in the removal of the dog from the custody of the Council, only the applicant or her daughter have a motive to remove the dog. Niki Soteriadis in particular has previously disobeyed the law by removing the dog from the reach of the authorities and has given evidence before VCAT that she would do anything to save her dog's life. The submission by the applicant that the supervening event is one that has occurred outside the applicant's control is merely assertion. It is not borne out by any objective facts; and

(h) The theft of the dog achieves Niki's expressed reason for the litigation: saving the dog. This is something the present litigation could not achieve. At best, success in the appeal can only achieve a reconsideration of applicant's application for an extension of time in which to review the declaration of the dog as a restricted breed dog. Even then the case is a weak one.

38 There was no draft notice of appeal with the application, but in the affidavit in support, the applicant's solicitor relied upon the following grounds:

(a) The Senior Member erred in refusing the applicant's application for an extension of time in which to review the decision of the respondent to declare her dog Buddy to be a restricted breed dog in circumstances where the Senior Member found that the dog Buddy had not been assessed or properly assessed as a restricted breed dog as at the time of the hearing;

(b) The Senior Member fell into error by affording the respondent an opportunity to give further evidence in support of its case after the final addresses had been given in the matter; and

(c) The Senior Member denied the applicant natural justice by making an order, without application, in circumstances where the applicant was not given an opportunity to be heard on the issue the subject of the order.

39 The essential basis of the application for leave to appeal, and the appeal, is that the Senior Member had before him no application by the respondent to have further time to assess Buddy against the new standard for restricted breed dogs and the applicant was not given an opportunity to be heard on such a proposed course of action. It is, essentially, an appeal based on a denial of procedural fairness, but an unusual one because the basis for the conditional order was to afford the applicant 'fairness', or substantial justice, because of the consequences for the dog of a refusal of leave to review the Council officer's declaration (putting the dog on 'death row' as it is commonly called).

40 In the application for leave to appeal, there was no indication of any basis to challenge the findings of fact made by the Senior Member. No question of law in relation to any of the findings of fact was, or could be, raised in the appeal. If because of a denial or procedural fairness the matter were remitted to VCAT, and an extension of time were granted, there could be no proper review of the declaration that Buddy was a restricted breed dog without the dog being available for assessment by the applicant. No doubt the assessment undertaken by the Council after the order of the Senior Member would be available. But there would be no possibility for the applicant to have an independent expert undertake his own assessment. In that sense, the removal of Buddy from the custody of the Council could render the outcome of the appeal nugatory.

41 On the other hand, the reasoning of the Senior Member up to the point of imposing the condition on the refusal of leave to extend the time within which to review the declaration made by the Council is sound, and more to the point, is not challenged in any way by the applicant. The condition imposed upon the refusal of leave lies at the periphery of the decision. It was warranted because of the concern of the Senior Member that the outcome could be seen as unjust 'to the extent there is a possibility that the Council could determine, after a "hands-on" inspection, that the dog is not in fact a Pit-bull Terrier'.[20] Because the Council was in possession of the dog at the time of the hearing and decision-making, it was possible for it to carry out the assessment and to do so in accordance with the new standard.[21]

42 It is clear law, and undisputed, that the onus is on the applicant to show why costs should not be ordered against her. There is undisputed evidence that the dog was unlawfully removed from the custody of the Council, but no admissible evidence as to the circumstances of that removal. The evidence of the unlawful removal is the Council's solicitors letter dated 24 June 2014, adduced by the applicant, and referred to above at paragraph 24. The evidence as to the circumstances of the removal is, on the face of it, peculiarly within the knowledge of the Council. The applicant submitted that the Court should conclude from the unexplained failure of the Council to adduce evidence, when it had the opportunity to do so, that there is no evidence to support the assertion that the applicant was directly or indirectly responsible for the theft. I take this to be a submission that I should draw a Jo[22]s v Dunkel22 inference that there was no evidence that would assist the Council.

43 There is no evidence that implicates the applicant in the theft of the dog. There may be some inference to be drawn from the evidence of Niki before the Senior Member that she was motivated to take the dog from the custody of the Council to avoid him being put down. But it is inappropriate to draw that inference where, as here, the allegation is so serious as to require the application of the Briginshaw v Briginshaw[23] standard. Moreover, for there to be a finding against the applicant, as distinct from Niki, it would be necessary to 'bring home' Niki's conduct to the applicant. The facts do not affirmatively establish that the applicant authorised or is otherwise responsible for any conduct of Niki. The facts that might be relevant are that Niki was:

(a) The person with the most control over the dog;

(b) The person apparently having the care and custody of the dog even when it was at her mother's home; and

(c) The person most concerned to protect the dog (for example by being the only person to give evidence before the Tribunal).

44 The man on the street might be tempted to speculate that these facts point to Niki being the most likely person to remove the dog from the Councils' custody. But these facts fall far short of establishing to the requisite standard that Niki did so, and apart the relationship between the applicant and Niki and that they were living together, there is even less basis to make the applicant responsible for any conduct of Niki.

45 In these circumstances there is no call to draw any Jones v Dunkel inference, and I do not do so. It is also not possible to take into account the conduct of Niki Soteriadis, which the respondent contends precipitated the litigation.

46 Although the dog was in the custody of the Council, and it was responsible for it, there is nothing to suggest that the dog was removed due to any fault on the part of the Council. In the absence of evidence of fault on the part of the Council, the question that arises is whether the applicant has discharged her burden of persuasion that a contrary order should be made?

47 In my view, this is a case where a supervening event has modified the subject of the dispute. The fact of removal of the dog from the Council's custody, through no one's proven fault, has an analogous effect to a change in the substratum for the decision sought, such as where the law changes. This justifies a contrary order, but not one casting the costs onto the Council in the absence of evidence that demonstrates it was at fault.

48 The authorities referred to in paragraph 12 above, establish a basic division between cases where the plaintiff has, in effect surrendered, and the cases where there has been a supervening event which has removed or modified the subject of the dispute so that the continued prosecution of the proceedin[24]is futile.24 There is in this case no surrender, despite the submissions of the Council that the subject of the dispute is not truly Buddy, but the process adopted in VCAT imposing a condition on the refusal to extend the time to enable a review of the declaration. Although it is true that the appeal, if leave were given, would at best have only resulted in the decision being overturned and the matter being remitted for rehearing, the ultimate and only real subject matter of the appeal was the dog. When it is gone there is no reason to proceed. It is as if the dog had died. It could not have been contended that there was any matter remaining for decision, except for costs. That is the position here.

49 This case is also analogous to the situation in Ringwood Plus Pty Ltd v Commissioner of State Revenue[25] where no order as to costs was made because both parties had acted reasonably in commencing and defending the proceedings and that their conduct continued to be reasonable until it became apparent the further prosecution would be futile.

50 Was the commencement of the application by Dina reasonable? Having regard to the proposition that the Court will not embark on a hypothetical evaluation of the prospects of the applicant succeeding in her application, it is not appropriate to attempt to express a view as to the prospects of success so as to reflect on whether it was reasonable to commence and proceed with the application. Suffice it to say that there was, so far as the materials reveal, a basis for the contention that the Senior Member had imposed the condition on the refusal of leave without giving the opportunity to the applicant to address that question. But it is also relevant to note that there is no transcript of the proceedings before VCAT to verify that proposition or to enable a proper evaluation of the strength of the point. As I have said, it appears to have been a peripheral element. That is as far as one can go without further materials and argument. Whether or not it had a likelihood of success or failure is really not possible, or appropriate, in the absence of further evidence and argument, to predict. It is therefore not possible to characterise the case as a weak or a strong case.

51 I therefore conclude that in relation to the costs of the proceeding up to the hearing on 4 February 2015, in my opinion the ordinary rule, that is the starting position laid down by r 63.15, should only be modified to the extent that each party should bear their own costs of the proceeding.

52 It is clear that an offer was made in advance of the hearing on 4 February 2015 for the parties to each bear their own costs. This was expressed, and appropriately justified, in the applicant's solicitor's letter of 30 January 2015. The respondent rejected that offer without explanation. It also made allegations directly implicating the applicants daughter Niki in the unlawful removal of the dog from the Council's custody and failed to back-up the allegations with any evidence whatsoever.

53 The respondent has argued that the hearing on 4 February 2015 was merely a mention of the proceeding. So far as the Court was aware, that was undoubtedly so. But the respondent must have been aware that the applicant proposed to discontinue the proceeding on the day. The applicant had sent proposed orders to that end. The letter of 30 January 2015 made it clear that the applicant wished to finalise the matter. Nothing could be clearer. At the hearing on 4 February 2015 the applicant proposed to seek leave to discontinue.

54 There were then many attempts by the applicant to have the respondent observe the orders made on 4 February 2015, and file affidavits and an outline of submissions. The result was another 're-scheduling' of the orders on 26 March 2015, followed by the contested hearing of the application to discontinue on 28 April 2015. Some of the costs - in particular the costs of the re-scheduling on 26 March 2015 - were incurred by the applicant as a result of the solicitors for the respondent being unable to comply with the orders because they were unwell. This cannot, in my opinion, be visited on the applicant. The applicant should clearly have the costs thrown away by reason of the non-observance of the order made on 4 February 2015.

55 Having regard to the fact that the respondent adduced no evidence in support of its allegations made on 4 February 2015, and because absent those allegations the discontinuance could and should have been dealt with that day, the costs incurred by the applicant after that day should also be paid by the respondent.

56 Then there is the question whether the costs of the applicant since 4 February 2015 should be paid on a standard or an indemnity basis. The applicant submitted that s 29 of the CPA applied, that the Council, by its solicitor, had breached the overarching obligation not to make any claim that does not, on the factual and legal material available at the relevant time, have a proper basis.[26] There is no evidence directly supporting the allegations that the applicant's daughter was responsible for removing the dog, as made on 4 February 2015.

57 Section 29 authorises the Court to order a person who the Court is satisfied on the balance of probabilities has contravened an overarching obligation, to pay the costs of any other person "arising from the contravention of the overarching obligation": s 29(1)(a). The opening words of the section also make it clear that the power is to be exercised where the Court considers it appropriate in the interests of justice. Section 29 does not limit any other power of the Court to make any order, including any order as to costs.[27]

58 The overarching obligations are those set out in ss 16 to 26: see s 2 definition. The relevant section here is s 18, which is as follows:

Overarching obligation - requirement of proper basis

1. A person to whom the overarching obligations apply must not make any claim or make a response to any claim in a civil proceeding that -

(a) is frivolous; or

(b) is vexatious; or

(c) is an abuse of process; or

(d) does not, on the factual and legal material available to the person at the time of making the claim or responding to the claim, as the case requires, have a proper basis.

(a) apply to any legal practitioner or any law practice acting for or on behalf of a party: CPA s 10(1)(b), (c);

(b) apply in respect of the conduct of any aspect of a civil proceeding, including, but not limited to any interlocutory application or interlocutory proceeding: CPA s 11(a);

(c) do not override any duty or obligation of a legal practitioner to a client to the extent that those duties and obligations and the overarching obligations can operate consistently: CPA s 13(1); and

(d) must be complied with by a legal practitioner or a law practice engaged by, or on behalf of, a client in connection with a civil proceeding despite any obligation the legal practitioner or the law practice has to act in accordance with the instructions or wishes of the client: CPA s 13(2).

60 The principles governing the power to make an order for indemnity costs were identified by J Forrest J in Cohen v State of Victoria (No 3).[28] In that case His Honour made an order for indemnity costs against a plaintiff's solicitor in a group proceeding. His Honour set out, at [10], the well-known passage from the judgment of Harper J in Ugly Tribe Co Pty Ltd v Sikola,[29] in which the special circumstances justifying a departure from the usual course were said to include 'conduct which causes loss of time to the Court and to other parties' and 'the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law'.[30]

61 In Macedon Ranges Shire Council v Thompson Redlich JA and Beach AJA said that:[31]

Costs may be ordered whenever it appears that an action has been commenced in circumstances where the applicant properly advised should have known it had no chance of success. When a litigant presses on where on proper consideration their case should have been seen to be hopeless, the discretion to make a special costs order may be enlivened. French J (as he then was) in J-Corp Pty Ltd v Australian Builders Labourers Federated Union of Workers Western Australia & Anor[32] considered that the discretion to award such costs would be enlivened when a party persisted, for whatever reason, in what should on proper consideration have been seen to be a hopeless case, and alluding to the presumption referred to by Woodward J in Fountain Selected Meats said that it was an unnecessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. But where the litigant did not recognise that its case was without merit a court may be disinclined to make a special costs order.[33] The Court must measure the litigant's conduct against the facts then known or which ought to have been known, the inquiries that the litigant ought reasonably to have made and the legal advice which the litigant ought reasonably to have obtained.[34] This exercise may be subject to some qualification in respect of a self-represented litigant.

62 In the current circumstances, when it came to the filing by the Council of its written Outline of Submissions on 10 April 2015, without any evidence as foreshadowed, it, or at all events its legal advisors, ought to have known on proper consideration that the case that Niki (and therefore the applicant) was responsible for the removal of the dog had no chance of success. From that time forward, at least, the discretion to make a special costs order was enlivened.

63 Counsel for the applicant submitted that the absence of evidence supporting the allegation that Niki was responsible for removing the dog means that there was no proper basis at the time the allegations were made on 4 February 2015. In order to reach that conclusion, the Court would need to have evidence as to what material was or was not available to the solicitor for the Council at that time, so that the Court is able to "measure the litigant's conduct against the facts then known or which ought to have been known, the inquiries that the litigant ought reasonably to have made and the legal advice which the litigant ought reasonably to have obtained".[35]

64 It is not possible therefore to conclude that either the solicitor or the Council breached its overarching obligation to have a proper basis at the time the allegations were made on 4 February 2015, or at any other time prior to filing the Outline of Submissions on 10 April 2015. Nor is there any merit in further investigation of the matter having regard to the nature of the subject matter and the likely level of the costs in issue.

65 I am therefore of the opinion that the applicant's legal costs incurred after 4 February 2015 (to be assessed on a standard basis), and that those costs incurred after the receipt by the applicant's solicitors of the Council's Submissions filed on 10 April 2015, (to be assessed on an indemnity basis), should be paid by the Council. The costs of the appearance on 4 February 2015 are problematic. On the one hand, the applicant made what has turned out to be a reasonable offer in its letter of 30 January 2015. On the other, the Court does not know what was known to the Council, and what basis the Council had for its belief that Niki had, or was responsible for removing the dog (apart from the basis advanced in the written submissions). The costs of the appearance on 4 February 2015 may well have been necessary for the purpose of discontinuing the proceeding, and even if the order made that day was as proposed by the applicant, the costs of that day were as likely as not to be included in the order that there be no order as to costs, or the parties bear their own costs, of the proceeding. I will therefore order the costs of that day form part of the costs of the proceeding.

66 For these reasons, in my view, the orders as to costs should be:

(a) Subject to paragraph (b) of this order, the parties should bear their own costs of the proceeding;

(b) The applicant's costs of and incidental to:

(i) the hearing on 26 March 2015, to be assessed on a standard basis; and

(ii) the hearing on 28 April 2015, prior to 10 April 2015, to be assessed on a standard basis, and after 10 April 2015, to be assessed on an indemnity basis;

67 I will make orders accordingly and reserve liberty to the parties to apply as to the further working out of the order.

[1] It is readily apparent that the application was made out of time and required an application for extension of time.

[2] [1990] HCA 59; (1990) 170 CLR 534, 537; cited with approval in Oshlack v Richmond River Council [1993] HCA 11; (1998) 193 CLR 72, 86.

[3] [1993] HCA 11; (1998) 193 CLR 72, 86.

[4] [1986] HCA 17; (1986) 161 CLR 513, 537.

[5] [1993] HCA 11; (1998) 193 CLR 72, 86.

[6] [2010] NSWSC 1301 at [21]; see also One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; 101 FCR 548, at [5]-[8]; Ringwood Plus Pty Ltd v Commissioner of State Revenue [2004] VSC 494 at [13]- [23]; Fehring Livestock Pty Ltd (In Liquidation) [2012] VSC 326 at [30],

[7] Not including the very many authorities Hallen AsJ cites.

[8] [1997] HCA 6; (1997) 186 CLR 622, 624-5 (citations omitted).

[9] The account of the background to the decision the subject of the application for leave to appeal is taken from the reasons for decision of the Senior Member, unless indicated to the contrary.

[10] It is noted that s 98(2A) was subsequently amended so that the application must be made within 14 days of the later of the date on which the decision was made and, where the applicant requests reasons for the decision, the date on which a statement of the reasons is given or the applicant is informed that no reasons will be given.

[11] Soteriadis v Nillumbik Shire Council (Unreported, VCAT 13 May 2014, J Smithers, Senior Member), Exhibit KFM-4 to the affidavit of Kiera Fiona Menzies sworn 6 June 2014.

[12] Reasons for decision in Soteriadis v Nillumbik Shire Council, J Smithers, 13 May 2014, exhibit 'KFM4' to the affidavit of Kiera Fiona Menzies sworn 6 June 2014.

[14] The factors identified in Hunter Valley Developments Pty Ltd v Minister for Home Affairs and Environment [1984] 3 FCR 344.

[15] Letter 24 June 2014 from Elliott Stafford and Associates to Menzies Ravia, exhibit KFM1 to the affidavit of Kiera Fiona Menzies sworn 23 April 2015.

[16] Letter 25 June 2014 from Menzies Ravia, Lawyers, to Elliott Stafford and Associates, exhibit KFM2 to the affidavit of Kiera Fiona Menzies sworn 23 April 2015. It is assumed that in some other communication there was a suggestion that Dina or Niki may have removed the dog.

[17] Exhibit KFM-3 to the affidavit of Kiera Fiona Menzies sworn

[18] In the applicant's outline of submissions dated 23 April 2015 the order is misquoted: see paragraph 9.

[19] Referring to the Civil Procedure Act 2010 ss 18 and 42 and to the decisions of the High Court in Clyne v NSW Bar Association [1960] HCA 40; (1960) 104 CLR 186 and the Victorian Court of Appeal in Rees v Bailey Aluminium Products Pty Ltd [2008] VSCA 244; (2008) 21 VR 478 at [32], amongst other authorities.

[21] I note that under the Domestic Animals Act 1994, once a declaration is made under s 98A then, for the purposes of any proceedings under the Act, including a proceeding in the Tribunal, it is presumed, in the absence of evidence to the contrary, that the dog is a restricted breed dog (if certain requirements for the training of the authorised officer have been met).

[22] [1959] HCA 8; (1959) 101 CLR 298.

[23] [1938] HCA 34; (1938) 60 CLR 336.

[24] See for example One.Tel Ltd v Commissioner of Taxation [2000] FCA 270; 101 FCR 548, at [6].

[25] [2004] VSC 494.

[26] Section 18 of the Civil Procedure Act 2010 (Vic).

[27] Ibid s 29(3).

[28] [2011] VSC 229.

[29] [2001] VSC 189.

[30] The principles governing costs were also recently summarised by Croft J in Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 at [11]- [19].

[31] [2009] VSCA 209, [15] (Redlich JA and Beach AJA).

[32] Unreported, Federal Court of Australia, 9 February 1993, French J (as he then was).

[33] Hurstville Municipal Council v Connor (1991) 24 NSWLR 724 (Loveday J); Monitronix Ltd v Michael (1992) 7 WAR 195 (Murray J); Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [18] (Harper J); Clarke v Deputy Commissioner of Taxation [2002] FCA 75; (2002) 50 ATR 173.

[34] Aljade and MKIC v OCBC [2004] VSC 351 (Redlich J).

[35] [2009] VSCA 209, [15] (Redlich JA and Beach AJA).